The newly released ConstructConnect Winter 2025 Construction Starts Forecast points to a year of uneven growth across the U.S. construction industry, with some sectors surging while others slide amid fluctuating economic conditions.
The latest forecast reflects a slightly upgraded expectation for overall build activity, with total construction starts now projected to increase by 1.1% in 2025. This upward revision is attributed to a more stable investment climate and beneficial developments in global trade. As noted in the report, the outlook has “improved with recent developments, specifically the recently announced China-US trade deals.”
The report highlights a strong performance in nonresidential construction, expected to grow 7.5% in 2025, powered by unprecedented spending in Manufacturing (up 67.3%) and large Commercial projects like data centers and transportation hubs.
Manufacturing’s rapid rise is attributed to reshoring efforts, semiconductor expansion, electric vehicle infrastructure, and growing AI and cloud-storage needs. The forecast notes that Private Offices, which account for substantial data center construction, will continue to surge as tech companies race to expand digital infrastructure.
Airport terminals, logistics facilities, and large transportation projects are also benefiting significantly from federal funding tied to national infrastructure programs. However, this peak is expected to be temporary. According to the forecast, new manufacturing construction is likely to contract sharply by 20% in 2026 as the current megaproject pipeline reaches maturity.
Institutional construction is expected to shrink by 8.8%, driven by steep declines in healthcare and correctional builds. The report projects deep drops in Prisons (down 35.9%), Hospitals & Clinics (down 24.6%), and Medical Miscellaneous facilities (down 18.3%).
Despite these declines, selective sectors are gaining traction, particularly those tied to demographic needs and community services. Nursing Homes are forecast to grow 20.2%, Police and Fire facilities by 10.7%, and Religious Buildings by 7.7%, signaling investment shifts toward social infrastructure and localized public service needs.
The commercial segment is expected to moderate to 4.5% growth, down from 2024, yet it remains relatively healthy due to Transportation Terminals (up 85.9%), Private Offices including data centers (up 35.9%), and Sports Stadiums (up 5.5%). Economic uncertainty and changing work habits continue to weigh down cyclical sectors such as Hotels (down 21.2%), Amusement Facilities (down 20.7%), and Parking Garages (down 20.0%).
Infrastructure spending continues to reinforce civil construction growth, with Airports up 14.2%, Roads rising 7.7%, and Bridges growing 7.6%. These advancements are largely tied to ongoing infrastructure grant programs. A slight setback is expected in Miscellaneous Civil, which is forecast to fall 11.6%, reflecting slower execution in smaller localized projects.
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The most subdued forecast remains in housing, where Residential starts are expected to decline 8.8% in 2025, marking a third consecutive year of declines. Single-family construction is projected to fall another 6.5%, while multi-family is set to drop 13.1%.
High-interest borrowing, tight credit markets, tariff volatility, and significant apartment oversupply continue to suppress growth. While small pockets of disaster-related rebuilding may generate localized boosts, the forecast notes that most regional markets face weak permitting and cautious builder sentiment.
Industry stakeholders are encouraged to monitor additional shifts over the coming year as newer trade policies, interest-rate changes, and federal funding allocations continue to reshape project pipelines. The report encourages readers to explore deeper insights: “Read the latest quarterly Construction Starts Forecast Report to get a five-year forecast of construction starts by type of structure and by state.”
The importance of the 2025 forecast lies not only in numerical projections but in how evolving economic strategies—from semiconductor investments to global tariff agreements—are redefining the map of U.S. development. This dynamic shift suggests the industry is entering a structural transformation, where megaproject cycles, AI infrastructure demands, and demographic pressures will dictate the next decade of building priorities, even as traditional sectors like hospitality and residential reset from years of volatility.
Originally reported by Michael Guckes, Chief Economist in Construct Connect News.
