Site Prep Contractors NAICS 238910

Jan 10, 2026 - 2026 Construction Playbook a Continuation of 2025

• Construction in 2026 will continue to rely on a narrow set of strong sectors, with data centers and public infrastructure driving most activity as broader building slows, according to several industry insiders who spoke to Construction Dive. Material costs are expected to rise a modest 2% to 4%, though tariffs and labor shortages will keep pressure on budgets. The data center boom remains robust, but power constraints, land scarcity, and limited skilled labor could temper new projects. Infrastructure work should stay solid thanks to existing federal funding, though delays in reauthorizing the Infrastructure Investment and Jobs Act or expiring clean energy incentives could tighten margins later in the year. Manufacturing construction will remain elevated due to ongoing megaprojects, even as EV-related investment cools. Lower interest rates may gradually revive residential, commercial, and private industrial projects, but improvements will unfold slowly as financing conditions ease.
• Private fixed investment in student dormitories rose 3.8% in the third quarter of 2025 to a $3.9 billion annual rate, according to US Bureau of Economic Analysis data and Reporting by the National Association of Home Builders (NAHB). The third-quarter 2025 growth followed three straight quarterly declines but still 5.5% below year-ago levels as high interest rates weigh on construction. The sector, which surged after the Great Recession alongside rising college enrollment, saw steep declines during the pandemic as enrollment dropped and projects stalled. Investment has since recovered as students return to campuses, though long-term growth is expected to moderate due to slower expansion in the college-age population. Federal projections show postsecondary enrollment rising just 8% from 2020 to 2030, far below the rapid gains of the 2000s. Even so, improving enrollment trends and the need for in-person learning are supporting a gradual revival in student housing construction, with expectations for continued but measured growth.

• Construction firms that work on civil infrastructure projects are holding steady as they manage uncertainties, including waning backlog growth and stagnant margins, according to FMI’s fourth-quarter Civil Infrastructure Construction Index (CICI) survey. The CICI reading for the third quarter was 50.6 compared to 50.8 in Q3 2025 – on a 100-point scale. Any CICI reading above 50 indicates that more civil infrastructure contractors see conditions as good than poor. About half of civil infrastructure contractors reported that their backlogs in Q4 met or exceeded their targets. However, most noted that public projects are making up a growing share of overall backlogs, as private-sector projects face greater uncertainty. Contractors expect backlog growth to slow over the next few quarters as more firms vie for a narrower set of public projects. Contractor margins remained steady but flat in Q4 2025 as bid competition and rising cost pressures eroded pricing power.
• The 43-day federal shutdown, the longest in U.S. history, ended November 12, but construction industry disruptions persist, according to Engineering News-Record. Infrastructure agencies, including the Department of Transportation, the Environmental Protection Agency, and the Army Corps of Engineers, remain under a continuing resolution through January 30, 2026, which limits spending, staffing, and new program starts. Contractors are facing mounting delays in grant agreements, environmental reviews, and permit approvals, particularly for transportation, water, and civil works projects. Inflation and seasonal timing compound risks, as procurement delays may drive up material costs. Public owners must still meet Infrastructure Investment and Jobs Act deadlines despite slowed federal processing. The reopening offers a path forward, but recovery will be gradual, requiring strategic planning across the construction sector to manage uncertainty and maintain momentum.