Site Prep Contractors NAICS 238910

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

• Weak nonresidential construction activity may soften demand for site-prep services. 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.
• Residential site prep contractors could see weaker demand amid an oversupply of new homes. Home builders facing the largest glut of unsold homes since 2010 are pitching new policy ideas to the White House to clear excess inventory, according to The Wall Street Journal. Builders' policy ideas include streamlined federal permitting, zoning incentives, expanded FHA access, and a federally backed rent-to-own program to help buyers who cannot afford today’s prices and interest rates. The proposals reflect mounting pressure as high costs, limited affordability, and new restrictions on private investors leave builders with too much inventory and fewer buyers. The industry is also trying to align with Trump administration officials who have criticized both builders and Wall Street landlords. While rent-to-own could help move excess supply, questions remain about enforcement, consumer protections, and whether builders could quickly ramp up construction afterward.

• Custom home building starts increased in the third quarter of 2025, according to National Association of Home Builders (NAHB) analysis of US Census Bureau data. In the third quarter, custom home building starts totaled 51,000, up 6% from Q3 2024. Over the last four quarters, there were 187,000 custom home starts, which is 5% higher than the previous four-quarter total of 178,000. The custom home market is less sensitive to interest rates than other types of home building, but is more affected by shifts in household wealth and stock market performance. Custom homes have gained market share as the spec home building market has slumped and stocks have risen.
• 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.