Framing Contractors NAICS 238130

Mar 7, 2026 - Data Centers Outbid Residential Developments

• The rapid expansion of artificial intelligence infrastructure is reshaping real estate development and affecting construction trades, as land and resources shift toward data centers, according to The Wall Street Journal. Tech companies are paying record prices for land once slated for housing. In Northern Virginia, data centers accounted for 20% to 30% of land development from 2013 to 2021, and activity from 2022 to 2024 rose 50% above the previous nine years combined. Developers say the higher returns from data centers make it harder to justify residential projects. For framing contractors and other housing trades, fewer housing starts and tighter competition for skilled labor and materials could reduce project opportunities while shifting construction demand toward large commercial and industrial facilities.
• Slight gains in home improvements and single-family homebuilding helped boost private residential construction spending by 1.5% in December 2025, according to analysis of Census Bureau data by the National Association of Home Builders (NAHB). However, total residential spending declined by 1.3% year over year, as the housing industry continues to face significant affordability challenges. Single-family construction spending increased 1.6% in December from November but was down 3.6% from December 2024. Multifamily construction spending rose 0.1% in December, marking the seventh consecutive month of softening gains. December's multifamily spending rose 2.9% year over year. Single-family spending has been on a downward trend since early 2024, pressured by elevated interest rates and concerns about the impact of US trade policy on materials costs. Multifamily construction spending peaked in mid-2023 and has since flattened.

• North American construction and engineering spending in 2026 for the single-family market is expected to grow by 1% after declining by an estimated 5% in 2025, according to FMI’s first-quarter 2026 North American Engineering and Construction Outlook. Mortgage rates are expected to remain in the 6% to 6.5% range through most of 2026, further straining home-price-to-income ratios. Stricter immigration policies and tariffs on construction materials are projected to increase construction costs. Higher insurance, property taxes, and transaction fees are also weighing on single-family housing affordability.
• Multifamily developer confidence declined in the fourth quarter of 2025, according to the National Association of Home Builders’ (NAHB) latest Multifamily Market Survey. The Multifamily Production Index (MPI) fell three points in Q4 2025 to 45 compared to the fourth quarter of 2024. The Multifamily Occupancy Index (MOI) decreased by seven points to 74 over the same period. An MPI or MOI reading of 50 or more indicates that multifamily production or occupancy, respectively, is growing. Multifamily developers’ headwinds include elevated construction costs and local regulatory difficulties. While interest rates have eased somewhat, they need to fall further to stimulate stronger multifamily construction activity. One bright spot in the MPI was garden/low-rise apartments, which, with a Q4 2025 reading of 54, was the only component of the MPI to see an increase in developer confidence. The 2025 gains for garden and low-rise apartments are expected to continue in 2026.