Economic uncertainty and newly announced tariffs in April created ripples across the construction sector, driving a sharp downturn in groundbreakings for the month, according to Dodge Construction Network’s latest report.
Total construction starts dropped by 9% in April, falling to a seasonally adjusted annual rate of $1.03 trillion. The decline affected nearly all major sectors of the industry, highlighting growing unease among developers and contractors.
Nonresidential building starts—which include offices, hotels, and healthcare facilities—dipped 3%, while residential construction also faltered, sliding 4%. The steepest losses, however, came in the nonbuilding category, which covers infrastructure projects such as highways, bridges, and utility work. That sector plummeted by a dramatic 22%.
Eric Gaus, chief economist at Dodge Construction Network, warned that the across-the-board decline points to deeper structural issues brewing within the construction pipeline.
“Broad-based monthly declines in construction starts represent a troubling signal for the sector,” said Gaus in a news release. “While not definitive, the slowdown in April aligns with delays in the planning pipeline and other economic data that capture the volatility and uncertainty of all the April tariff announcements.”
He added that ongoing policy uncertainty, especially related to international trade, is likely to cast a long shadow over upcoming construction activity.
“Lingering questions over trade policy and the broader economy will continue to weigh on construction activity in the months ahead,” Gaus said.
Largest Projects That Did Break Ground
Despite the overall downturn, several large-scale commercial and infrastructure projects managed to move forward. Dodge highlighted the nine biggest U.S. projects that began construction in April:
- $1.8 billion Manhattan Tunnel Project in New York City.
- $1 billion Kaiser Permanente Medical Center in Sacramento, California.
- $940 million Bally’s River West Hotel and Casino in Chicago.
- $875 million and $855 million GM-Samsung SDI battery cell factory buildings in New Carlisle, Indiana.
- $775 million West Alabama Highway project in Thomasville, Alabama.
- $365 million Carpenter Wind Farm in Carpenter Township, Indiana.
- $331 million mixed-use residential and retail development in Jersey City, New Jersey.
- $256 million Vista Point Apartments at Fairview Life Care Community in Groton, Connecticut.
- $226 million Rambler Riverfront District apartments in West Lafayette, Indiana.
Sector-by-Sector Breakdown
Commercial construction, which saw a strong showing in March, took a significant hit in April, with starts falling 21% month-over-month. Key commercial categories such as retail, office, and warehouse developments all experienced notable slowdowns.
Institutional construction provided a modest bright spot, increasing by 2% in April thanks to rising investment in healthcare and education buildings.
Manufacturing starts, another volatile category, surged 78% for the month—one of the few areas to post a strong rebound.
On a year-to-date basis, nonresidential starts remain down 10%, though commercial starts have increased by 3% compared to the same period last year.
Infrastructure Takes a Hit
The infrastructure sector saw significant pullbacks across the board. A staggering 70% plunge in utility construction projects led the downturn. Highway and bridge work dropped by 8%, while environmental public works declined 2%.
Still, year-to-date numbers tell a more optimistic story. Nonbuilding starts are up 8% so far in 2025, buoyed by earlier gains in utility-scale projects and consistent road and bridge work in Q1.
Residential Sector Continues to Soften
Residential construction activity also showed signs of continued cooling. Total starts in the sector declined by 4% in April. Single-family housing dropped 5%, while multifamily starts slipped 3%.
On a cumulative basis, residential starts are down 5% for the year. That includes a 6% decline in single-family housing and a 4% drop in multifamily developments compared to the first four months of 2024.
Outlook: More Uncertainty Ahead
Looking ahead, the construction sector is bracing for further uncertainty tied to global trade tensions and domestic policy shifts. The steep monthly declines in April could signal a broader trend of reduced momentum across all major categories, even as pockets of opportunity emerge in healthcare, manufacturing, and select infrastructure projects.
“It’s clear that the planning pipeline has been impacted by rising materials costs, policy shifts, and overall economic unease,” said Gaus. “These are signals that the industry can’t ignore.”
Originally reported by Sebastian Obando in Construction Dive.
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