Site Prep Contractors NAICS 238910

Apr 10, 2025 - Highway, Street Projects Lead Construction Spending

• The total value of construction put in place increased 0.7% in February compared to January, according to the US Census Bureau. Spending on nonresidential projects rose 0.3% to a record $1.26 trillion. Highway and street construction projects accounted for 40% of February’s nonresidential gains as public projects drove growth, according to Associated Builders and Contractors (ABC) analysis of US Census Bureau data. While public nonresidential spending was up 6.1% in February over the same month in 2024, private nonresidential spending has not kept pace, growing just 2.5% over the same period. In a press release, ABC’s Chief Economist Anirban Basu said, “The mix of high interest rates, tight lending standards, and unprecedented uncertainty regarding trade policy will continue to weigh on private sector construction in the coming months.”
• Higher home prices could weaken demand for new homes, as a lack of affordability was a significant headwind for the US housing market before tariffs added additional uncertainty. On April 9, the Trump administration paused its reciprocal tariff agenda for 90 days for most countries but left in place a baseline 10% import duty on all countries except China, which faces total tariffs of 145%. Canada and Mexico are not subject to the new 10% baseline tariffs, and goods trading under the US-Mexico-Canada Agreement will remain duty-free. Key home-building materials, including gypsum from Mexico and Canadian lumber, avoided additional levies. However, tariffs are expected to increase prices for other housing inputs, including steel, aluminum, copper, and home appliances. Before Trump’s tariff pause, a UBS analyst estimated reciprocal tariffs could add about $6,400 to the cost of building the average house.

• Tight lending conditions and high interest rates have weakened demand for new home construction loans. In the fourth quarter of 2024, the volume of outstanding residential acquisition, development, and construction (AD&C) loans made by FDIC-insured institutions declined for the third quarter in a row, according to the National Association of Home Builders (NAHB). The value of residential AD&C loans in Q4 2024 fell 1.02% to $490.7 billion compared to Q3 2024. Construction loans for single-family homes and townhomes fell for the seventh consecutive quarter in Q4 2024.
• During recent earnings calls, executives at several publicly traded construction companies mostly dismissed potential headwinds and expressed optimism amid steady demand and long-term growth prospects, according to Construction Dive. Executives were largely upbeat despite uncertainties, including potential tariff-related trade strife, shifting regulations, and the fate of federal infrastructure funding. Construction firms Granite and AECOM said federal support for roads, bridges, and water projects would continue even as the political winds in Washington have shifted. Jacobs, Skanska, and Fluor pointed to data center expansion amid robust demand for computing power from rapidly rising AI implementations.