Construction project stress rose slightly at the start of 2026, reversing months of steady improvement, according to new data from ConstructConnect.
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The Cincinnati-based construction data provider reported that its Project Stress Index (PSI) increased 0.5% month over month in January. The index tracks projects that have been paused, abandoned or have experienced delayed bid dates — key indicators of instability in the development pipeline.
The modest uptick was driven primarily by increases in projects placed on hold and bid date delays, which climbed 16.9% and 13.3%, respectively, during the month. However, abandoned projects declined 19.6% in January, helping offset some of the broader increase in stress.
The PSI currently sits about 2.5% above its 2021 baseline, reflecting lingering uncertainty in certain market segments. Still, the overall picture is considerably stronger than it was a year ago.
“The PSI remains 11.6% below year-ago levels,” said Devin Bell. “In that period, all three stress indicators have decreased as well.”
Over the past 12 months, abandonments showed the sharpest improvement, dropping 20.7%. Bid date delays and projects placed on hold also declined year over year, down 8.3% and 3.9%, respectively.
The January uptick suggests that while overall conditions have stabilized compared to 2025’s volatility, developers and contractors remain cautious as they navigate financing costs, labor availability and shifting demand across sectors such as multifamily, office and industrial construction.
According to Bell, both public and private construction have benefited from lower stress levels over the past year.
Both private and public project abandonments fell 20.4% and 41.1%, respectively, over the past 12 months. Meanwhile, projects placed on hold declined 6.3% in the private sector and 2.7% in public construction.
The improvement in public sector stability may reflect continued funding flows from federal infrastructure programs, while private developers appear to be regaining confidence amid moderating interest rates and improved access to capital.
“Recent rate cuts could help continue keeping stress conditions low in 2026 as firms are able to access loans on more favorable terms,” said Bell.
Lower borrowing costs can ease pressure on developers facing tight margins, particularly in capital-intensive segments such as multifamily housing, data centers and healthcare facilities.
The slight rise in January’s PSI comes at a time when other construction indicators have shown mixed results. While some sectors report shrinking backlogs and slower planning activity, overall construction employment has remained relatively resilient.
Analysts note that even small monthly shifts in the PSI can signal changes in developer sentiment. An increase in projects placed on hold often indicates caution rather than outright cancellation, meaning many developments could still move forward if financing conditions improve.
The fact that abandonments continue to trend downward is particularly significant. Project cancellations typically reflect deeper financial distress or long-term feasibility issues, whereas delays and temporary holds can be reversed.
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Industry observers will be watching closely to see whether January’s increase marks a temporary pause in recovery or the beginning of renewed pressure. Much will depend on interest rate policy, material costs and regional demand patterns.
For now, the data suggests a construction market that is stabilizing but still sensitive to economic shifts. While stress levels are meaningfully lower than a year ago, developers and contractors continue to operate in a cautious environment as 2026 gets underway.
Originally reported by Sebastian Obando, Reporter in Construction Dive.
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