HVAC & Plumbing Contractors NAICS 238220

Feb 13, 2026 - Nonresidential Building Spending to Remain Sluggish Through 2027

• Weak nonresidential building construction activity may soften demand for architectural paints. Construction spending for nonresidential buildings is expected to remain sluggish in 2026 and 2027, according to the latest American Institute of Architects’ (AIA) Consensus Construction Forecast. Spending on nonresidential building construction is expected to rise 1% in 2026 and 2.2% in 2027. Through 2027, commercial facility growth will be led by data centers, with spending increasing 26.3% in 2026 and 16.5% in 2027. However, offices are expected to see a sharp decline in spending over the forecast period, while warehouse and retail will see weak growth this year and modest gains in 2027. Manufacturing construction spending will fall 3.9% in 2026 and drop 2.8% next year. Spending on institutional projects will grow 2.7% this year, and 2.8% in 2027, led by steady growth in the health sector, but educational, and amusement and recreation project spending will be flat.
• North American construction and engineering spending in 2026 is expected to grow by 1% after decreasing an estimated 1% in 2025, according to FMI’s first-quarter 2026 North American Engineering and Construction Outlook. Nonresidential building construction spending in 2026 is expected to be flat after decreasing an estimated 2% in 2025. Data centers will post spending growth of 23% in 2026 amid high demand for AI, but that will be offset by weakness in other nonresidential building segments, including warehouse (spending down 5% in 2026), commercial (-4%), lodging (-2%), and education (0%). The office market remains pressured by a record-high vacancy rate of 21%, according to Moody's Analytics. Healthcare construction spending is forecast to rise 3% in 2026 amid large hospital projects in several major metros. High mortgage interest rates and affordability constraints will contribute to a 5% decline in 2026 single-family construction spending. Supply gluts in some metro areas and tepid rent growth will reduce multifamily spending by 9% in 2026.

• Home remodeling spending growth is expected to moderate in 2026, according to the Leading Indicator of Remodeling Activity (LIRA) report released in January by the Joint Center for Housing Studies at Harvard. Homeowner spending on improvements and repairs is expected to increase 2.9% to $527 billion in the first quarter of 2026, compared to Q1 2025. In the second quarter of 2026, remodeling spending will trend downward to $518 billion but still be up 2.1% from Q2 2025. Spending will then moderate further to $517 billion in Q3 2026, up 2% from Q3 2025. In the fourth quarter of 2026, year-over-year spending is forecast to rise 1.6% to $522 billion. While solid remodeling permitting activity and gradually improving single-family home sales will support remodeling activity, potential headwinds include continued weakness of housing starts and elevated interest rates.
• US construction spending on HVAC and plumbing materials is expected to post solid annual growth in 2026, according to FMI's most recent Building Products Market Overview report. In 2026, spending on residential HVAC is forecast to increase by 4.4% over 2025, and nonresidential HVAC spending is projected to grow by 2.7% over the same period. HVAC spending is being driven in part by updates to energy efficiency codes for equipment, which will boost demands for new construction and retrofits. Wider adoption of high-efficiency heat pumps is also a tailwind for the HVAC industry. Spending on nonresidential plumbing materials is projected to increase by 2.7% in 2026; residential plumbing spending is expected to rise by 0.3%. High copper prices are accelerating the shift to alternative plumbing product materials, including PVC and PEX, which offer lower material and labor costs during installation.