US Construction Sector NAICS 23

Jan 6, 2026 - Builder Confidence in Negative Territory Every Month in 2025

• Home builder confidence in the single-family market increased in December but remained solidly in negative territory as builders face ongoing headwinds, including high construction costs, tariffs, and economic uncertainty, according to the National Association of Home Builders (NAHB). Home builder sentiment, as measured by the NAHB/Wells Fargo Housing Market Index (HMI), rose one point to 39 in December 2025. Any HMI reading over 50 indicates that more builders see conditions as good than poor. Builder confidence readings remained below 50 for every month in 2025 and were in the high 30s in the fourth quarter. The HMI survey also showed that 40% of builders reduced home prices in December to lure potential buyers off the sidelines, and the average price reduction was 5%, down one percentage point from November.
• Demand for building design services declined in November from the prior month, marking the thirteenth consecutive month of weak architectural billings, according to a December report by the American Institute of Architects (AIA). The AIA’s Architecture Billing Index (ABI) fell to 45.3 compared to October's reading of 47.6. Any reading of 50 or more indicates growth in architectural billings. The score for new project inquiries fell to 51.4 in November from 54.8 in October, and the new design contracts index dropped to 42.7 from 47.1. The AIA’s Chief Economist, Kermit Baker said, "Weakness in business conditions at architecture firms continues to be widespread, with declining billings across all major specializations and in every region except the Midwest. However, inquiries for new projects continued to increase, and design activity at firms in the Midwest – a region that traditionally has had a disproportionate share of manufacturing activity – appears to have hit its bottom for this cycle and is expected to continue to improve."

• The total value of construction starts in November fell 20.5% compared to October, according to Dodge Construction Network. Nonbuilding construction starts declined 43.7%, led by a 70.4% drop in miscellaneous nonbuilding starts and followed by weak activity in utilities (-61.4%) and highways and bridges (-4.9%). Nonresidential building construction starts decreased by 13.4% in November compared to the previous month, as office and data center starts dropped 40.5% and hotel starts declined by 33.2%. Commercial segments that posted growth in November included parking garages (+32.1%), retail stores (+8.3%), and warehouses (+6.4%). Institutional starts grew 11.4% as gains in public and educational building starts offset declines in amusement and dormitory starts. Manufacturing starts remained volatile in November, declining 50.7% from October levels. Residential starts grew 13.3% in October, with single-family starts rising 3.1% and multifamily starts up by 35.6%.
• Construction firms that work on civil infrastructure projects are holding steady as they manage uncertainties, including waning backlog growth and stagnant margins, according to FMI’s fourth-quarter Civil Infrastructure Construction Index (CICI) survey. The CICI reading for the third quarter was 50.6 compared to 50.8 in Q3 2025 – on a 100-point scale. Any CICI reading above 50 indicates that more civil infrastructure contractors see conditions as good than poor. About half of civil infrastructure contractors reported that their backlogs in Q4 met or exceeded their targets, although most reported that public projects make up a growing share of overall backlogs, as private-sector projects face greater uncertainty. Contractors expect backlog growth to slow over the next few quarters as more firms vie for a narrower set of public projects. Contractor margins remained steady but flat in Q4 2025 as bid competition and rising cost pressures eroded pricing power.