DUBLIN — The latest construction outlook signals a challenging year for the U.S. building sector in 2025, but analysts remain cautiously optimistic about steady growth ahead. According to a new industry report from ResearchAndMarkets.com, U.S. construction output is projected to expand just 1% in 2025, a steep drop from the 6.5% growth recorded in 2024.
The slowdown is attributed to multiple pressures: weakening homebuilder sentiment, declining investor confidence, and rising material costs caused by retaliatory tariffs. These tariffs, levied on steel, lumber, and aluminum imports, have pushed up expenses and forced firms to reassess the viability of many projects.
The U.S. Census Bureau reports that the price index of new single-family homes under construction rose 4.2% year-over-year between January and April 2025, following a 2.2% increase in 2024. Higher costs, coupled with sluggish demand, have cooled housing activity. Residential output has dropped, with new housing permits declining 3.5% year-on-year and housing starts falling 1.6% YoY in the first four months of 2025.
While near-term growth looks weak, the long-term outlook is more favorable. The industry is expected to post an average annual growth rate (AAGR) of 1.9% between 2026 and 2029, driven largely by transportation infrastructure, data center construction, housing, and manufacturing investments.
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One of the most significant boosts came in June 2025, when the Federal Highway Administration (FHWA) announced $4.9 billion in grant funding under the Bridge Investment Program. The initiative targets the modernization of around 42,000 bridges nationwide, addressing long-standing infrastructure needs. Additionally, the FHWA distributed another $500 million through the Competitive Highway Bridge Program (CHBP), focusing on replacing and repairing aging bridges across 18 rural states.
These infrastructure commitments are expected to provide a steady pipeline of projects that will help offset weaker performance in residential and commercial sectors. Moreover, sustained investment in data center facilities and advanced manufacturing plants is anticipated to support long-term construction demand as digital infrastructure and domestic production become national priorities.
Despite the cautious optimism, analysts warn that external risks—including global trade tensions, fluctuating input costs, and financing constraints—could continue to shape the trajectory of the industry over the next several years.
Originally reported by Research and Markets in Yahoo Finance.
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