Construction and Mining Equipment Wholesalers NAICS 423810

May 14, 2025 - Home Builders Boost Incentives to Lure Wary Buyers

• US home builders are dangling more incentives to close deals amid a tepid spring home-buying season that is halfway over, according to The Wall Street Journal. Builders typically notch 40% of their annual sales during the spring, but mortgage rates that are stuck around 7% and a lack of affordability have reduced demand. Builders have increased incentives to bring buyers off the sidelines, including mortgage-rate buydowns, design upgrades, and price cuts. In the first two weeks of April, incentives offered by builders equaled 7.2% of the purchase price, up from 6.1% in January, according to data from John Burns Research & Consulting. Incentives are eating into builder profits during a season that usually sees few discounts, and prices tend to rise. Weaker homebuilding activity could reduce demand for some types of construction machinery.
• North American construction and engineering spending in 2025 is expected to grow by 2% after increasing an estimated 7% in 2024, according to FMI’s second-quarter 2025 North American Engineering and Construction Outlook. Nonbuilding construction will lead growth in 2025, supported by solid public funding commitments with bipartisan support. Water projects will lead infrastructure spending growth in 2025 with a rise of 8%, followed by power (6%), sewage and waste disposal (6%), and highway and street (2%). Single-family construction spending is forecast to rise by 3% in 2025, but headwinds include higher costs due to materials tariffs, tighter immigration enforcement, and a lack of affordability. A recent jump in new apartment supply and unfavorable cost conditions will reduce multifamily spending by 12% in 2025. Nonresidential building construction spending will be flat in 2025, as steady growth in segments including amusement and recreation, educational, transportation, and communication will be offset by weakness in lodging and commercial.

• The total value of construction put in place decreased 0.5% in March compared to February, according to the US Census Bureau. Spending on nonresidential projects fell 0.5%, and residential spending declined by 0.4%. Within the nonresidential segment, 11 of 18 construction subcategories saw spending decline, including healthcare (down 1.8%), lodging (-1.3%), office (-1.2%), commercial (-1%), and educational (-0.8%). Spending was also weaker for power, highway and street, sewage and waste disposal, manufacturing, and communication. Pockets of spending growth included transportation (up 1.2%), public safety (+0.7%), conservation and development (+0.5%), water supply (+0.3%), and amusement and recreation (+0.1%). Associated Builders and Contractors Chief Economist Anirban Basu said, “Data center investments, which accounted for more than 70% of the increase in private nonresidential construction spending between March 2024 and March 2025, are perhaps the only remaining source of industry momentum. Manufacturing construction, while still elevated, has wavered in recent months. Most commercial segments remain subdued under the weight of high borrowing costs and tight lending standards. Residential construction continues to slide.”
• Demand for building design services declined in March compared to February, according to an April report by the American Institute of Architects (AIA). The AIA’s Architecture Billing Index (ABI) fell to 41.1 in March compared to February’s reading of 45.5. Any reading of 50 or more indicates growth in architectural billings. The score for new project inquiries fell to 47.7 in March compared to 47.8 in February, but the index for the value of new design contracts increased from 42 to 42.4. The AIA’s Chief Economist, Kermit Baker said, “Clients are increasingly cautious about starting projects due to uncertainty over future trends in interest rates and building materials costs, as well as the potential for an economic slowdown. Unfortunately, this softness in firm billings is likely to continue as indicators of future work remain weak, however, the average project backlog at firms stands at a reasonably healthy 6.5 months, offering a bit of a buffer if future project work continues to remain soft.”