US Construction Sector NAICS 23

Sep 4, 2025 - Civil Infrastructure Firms Weather Uncertainty

• Construction firms that work on civil infrastructure projects are holding steady as they manage uncertainties, including waning backlog growth and weaker margins, according to FMI’s third-quarter Civil Infrastructure Construction Index (CICI) survey. The CICI reading for the third quarter was 50.8 compared to 52.2 in Q2 2025 – on a 100-point scale. Any CICI reading above 50 indicates that more civil infrastructure contractors see conditions as good than poor. While about 52% of firms surveyed said their work backlogs had risen in Q3 2025 compared to a year earlier, only 25% expected backlog growth in Q4. While civil infrastructure firms expect backlogs to ease, margins remain under pressure from competitive bidding and higher costs. FMI expects firms to focus on project selection and cost controls to improve margins, as higher work volumes are a less reliable profitability boost.
• New single-family home sales fell 0.6% month-over-month and were down 8.2% year-over-year in July 2025, according to the US Census Bureau. July’s total new home sales reached 652,000 units. However, home sales beat analysts’ outlook; economists polled by Reuters had expected July sales to reach only 630,000 units. The Chairman of the Federal Reserve has hinted at a possible rate cut during the central bank’s meeting in September. However, Fed rate policy will likely depend heavily on August employment and inflation data due in September. High mortgage rates continue to outpace wage growth, keeping home purchases out of reach for many would-be buyers. Some industry watchers expect new home sales to remain under pressure from interest rates through the end of the year.

• The Trump administration’s proposed $27 billion cut to federal rental assistance programs - amounting to a 43% reduction - has triggered concern across the affordable housing sector, stalling projects and shaking lender confidence, according to The Wall Street Journal. Some developers have halted construction due to postponed Section 8 subsidies, while lenders cite uncertainty over HUD funding as a significant deterrent. Although the House Appropriations Committee rejected the overhaul, HUD continues lobbying for the cuts, which would slash its budget by 44%. Critics warn that the move could destabilize the housing system, jeopardizing billions in multifamily loans and undermining gains from recent tax law changes that expanded the Low-Income Housing Tax Credit. Despite these incentives, developers argue that new affordable units may lack the operating revenue to remain viable without voucher programs.
• Most single-family homebuilders have yet to leverage artificial intelligence, according to a recent survey by the National Association of Home Builders (NAHB). Among 12 categories of AI use, there was significant adoption in just two. One-fifth of builders surveyed said they used AI to generate advertising and marketing materials, and 11% use AI to help analyze markets and plan projects. Other uses, including project design, safety monitoring, managing production and scheduling subcontractors, and permitting had use rates of 3% or less. Builders not using AI were asked to rate which uses they were most likely to adopt in the next two years using a scale of 1 (not at all likely) to 5 (very likely). Generating advertising and marketing materials, and help analyzing markets and plan projects had the highest likelihood ratings – 3.6 and 3.0, respectively. The other 10 AI uses had likelihood ratings of 3.0 or less.