US Construction Sector NAICS 23

Mar 6, 2026 - Nonresidential Construction Spending Drops

• The total value of nonresidential construction put in place declined 0.6% in December 2025 compared to the prior month, according to the US Census Bureau. Private spending was down 0.7% in December, while public spending was off by 0.4%. Speaking of December's spending results, Associated General Contractors of America (AGC) Chief Economist Anirban Basu said, "This decline was concentrated in the manufacturing segment, which is now down nearly 16% from the August 2024 all-time high. Given trade policy uncertainty and the waning effects of the CHIPS Act, manufacturing-related spending will likely continue to decline over the next several quarters. While manufacturing is the most significant driver of nonresidential weakness, it’s far from the only one. Eight of the 11 private nonresidential subsegments contracted in December, and total private nonresidential spending is now down 1.8% year over year."
• In late February, mortgage rates fell below 6% for the first time in over three years, offering some relief to buyers but only limited momentum for the housing market, according to The New York Times. The average 30 year rate dropped to 5.98%, which reduces monthly payments and may encourage more homeowners to consider selling. Analysts say the impact on home building remains mixed because lower rates have not yet produced a clear rise in sales or renovation activity. Builders continue to face high prices, cautious consumers, and a market constrained by years of low inventory. Federal efforts to ease affordability, including expanded mortgage bond purchases and proposals to curb investor buying, have had little effect on supply. Economists note that meaningful improvement will depend on policies that support new construction, along with state and local zoning changes that make it easier for developers to build.

• Demand for building design services declined in January from the prior month, according to a February report by the American Institute of Architects (AIA). The AIA’s Architecture Billing Index (ABI) fell to 43.8 compared to December's reading of 47.1. Any reading of 50 or more indicates growth in architectural billings. The score for new project inquiries fell to 49.3 in January from 52.9 in December, and the new design contracts index dropped to 42.7 from 47.5. January marked the first month since April 2025 that new project inquiries declined, as architecture clients remain cautious and new projects tended to be smaller in scale. All architectural specializations continue to face challenges, but multifamily has seen a slower decline than other segments of the industry.
• The construction industry is turning to AI tools and agents to ease project managers’ workloads and prepare for a wave of retirements that could claim 41% of the workforce by 2031, according to the National Center for Construction Research and Education and reporting by The Wall Street Journal. Companies such as Procore, Trimble, and Autodesk are rolling out AI systems that analyze safety risks, summarize documents, extract data, and automate routine tasks, helping address what the Associated Builders and Contractors expect will be a shortage of about 349,000 workers. Startups are using computer vision to track job progress and match workers with open roles, while natural language processing lets superintendents dictate logs and speed daily reporting. Firms say AI can also preserve the expertise of veteran builders by capturing their decision-making and best practices. About 60% of construction companies use some form of AI, but adoption remains uneven.