Electrical Contractors NAICS 238210

May 13, 2026 - Residential Props up Private Construction Spending

• The total value of private construction put in place increased 0.8% in March compared to February, according to the US Census Bureau. Private spending on nonresidential projects decreased 0.2% and residential spending rose 1.7%. Residential spending was led by a 2.7% rise in single-family construction. Multifamily construction spending rose 0.3%. Within the nonresidential segment, pockets of private spending growth included amusement and recreation, which saw March growth of 1.3% over the previous month, followed by office, which includes data centers (+1.1%), religious (+3.3%), transportation (+0.4%), and power (+0.2%). Most other nonresidential segments saw flat or reduced spending in November. Private spending on nonresidential structures has been in negative territory for nine consecutive quarters, the longest period of contraction on record, according to Reuters. Industry observers suggest the inflationary effects of the war with Iran, along with tariffs, are increasing builders' costs.
• Home remodeling spending growth is expected to slow significantly early in 2027, according to the Leading Indicator of Remodeling Activity (LIRA) report released in May by the Joint Center for Housing Studies at Harvard. Homeowner spending on improvements and repairs is expected to increase 1.8% to $516 billion in the second quarter of 2026, compared to Q2 2025. In the third quarter of 2026, remodeling spending will trend slightly upward to $518 billion, up 2.4% from Q3 2025. Spending will then remain flat at $518 billion in Q4 2026, up 1.8% from Q4 2025. In the first quarter of 2027, year-over-year spending is forecast to rise just 0.5% to $523 billion. Remodeling permitting and building product sales have remained flat recently, but homeowners are expected to maintain spending near 2025 levels. Remodeling spending is likely to remain subdued, barring a turnaround in the construction sector.

• Home builders are cutting costs by using cheaper materials, simplifying designs, and reducing features to make homes more affordable amid high prices, mortgage rates, and economic uncertainty, according to The Wall Street Journal. Builders are installing particle-board cabinets, thinner countertops, fewer windows, and lower-end appliances, while shrinking home sizes and standardizing layouts. Some are also offering mortgage-rate buydowns to attract buyers, but homes still often sell for more than $400,000. Buyers face trade-offs between affordability and quality, with some reporting missing or lower-quality finishes. Industry analysts say these changes are spreading as builders prioritize efficiency and profit margins. While companies argue that homes remain durable and accessible to first-time buyers, critics say newer houses feel less customized and lower in quality than older homes.
• North American construction and engineering spending is expected to remain flat in 2026 after declining by 1% in 2025, according to FMI’s second-quarter 2026 North American Engineering and Construction Outlook. Within building segments, office construction is projected to grow 6% in 2026, driven by strong data center demand, while health care (+2%) also expands amid large hospital projects. Education and amusement and recreation are expected to remain stable but notch flat spending growth in 2026. Several segments will decline, including lodging (-4%), commercial (-6%) and public safety (-2%), reflecting financing constraints and uneven demand, while manufacturing construction is also projected to fall (-2%) following a surge in prior years. Residential building activity continues to weaken, with single-family construction forecast to drop 2% due to affordability pressures and elevated mortgage rates. Multifamily spending is projected to be down 1% as high supply levels weigh on rent growth and new development.