HVAC & Plumbing Contractors NAICS 238220

Jul 9, 2025 - US Construction Spending Drops

• The total value of construction put in place declined 0.3% in May 2025 compared to April, according to the US Census Bureau. Spending on nonresidential projects decreased 0.2% and residential spending was down 0.5%. Within the nonresidential building construction segment, lodging saw the most significant drop in May as spending fell 1.4%, followed by commercial (down 0.8%) and office (-0.2%). However, pockets of nonresidential building construction growth in May included public safety (up 0.7% over April), amusement and recreation (+0.5%), communication (+0.4%), healthcare (+0.4%), transportation (+0.2%), and healthcare (+0.1%). High mortgage rates and rising numbers of unsold new homes have weighed on the new single-family housing market, according to Reuters. US trade policy has also contributed to increased economic uncertainty.
• New single-family home sales fell 13.7% month-over-month and were down 6.3% year-over-year in May 2025, according to the US Census Bureau. May’s total new home sales reached 623,000 units. According to Dow Jones estimates, Wall Street analysts had expected May sales to reach 695,000. In recent quarterly reports, some homebuilders said high interest rates and weaker consumer confidence weighed on demand. As sales of new homes remain soft, inventories of unsold homes are increasing. At the end of May, there were 507,000 new homes for sale, up 15% compared to May 2024. The number of unsold new homes in May was the highest since the summer of 2022, after the Federal Reserve began increasing interest rates.

• North American construction and engineering spending in 2025 is expected to grow by 1% after increasing an estimated 7% in 2024, according to FMI’s third-quarter 2025 North American Engineering and Construction Outlook. Nonresidential building construction spending is forecast to rise 1% in 2025, led by growth in data centers (up 32% over 2024 spending), amusement and recreation (+6%), educational (+4%), and transportation (+4%). Nonresidential building construction spending will be tempered by weakness in warehouse (down 5% compared to 2024 spending), commercial (-4%), lodging (-3%), and manufacturing (0%). Amid high mortgage interest rates and a lack of affordability, single-family construction spending is forecast to rise by 1% in 2025. A recent jump in new apartment supply and unfavorable cost conditions will reduce multifamily spending by 9% in 2025.
• Some home-services firms are leveraging AI-enabled tools to increase the accuracy and efficiency of scheduling, customer service, and other operations, according to The Wall Street Journal. One startup, Netic, offers AI-enabled software that can answer and return customer calls, predict maintenance needs based on weather or emergencies, and schedule and prioritize work orders. AI adoption in the home-services trades is being led by private equity firms active in roll-up consolidation in fragmented services industries, including HVAC, plumbing, electrical, and roofing. Integrating AI, which is often compatible with customer relationship management software, can help private equity firms manage their portfolios of home-services firms, boosting efficiency and profits. Large, independent home-services firms are also investing in AI.