Structural Steel and Precast Concrete Contractors NAICS 238120

Sep 7, 2025 - Weak Nonresidential Building Construction Spending

• Construction spending for nonresidential buildings is expected to remain sluggish in 2025 and 2026, according to the American Institute of Architects’ (AIA) most recent Consensus Construction Forecast. Total spending for nonresidential building construction is expected to rise 1.7% in 2025 and 2% in 2026 after increasing 2% in 2024. For the next two years, growth will be led by data centers. Spending on institutional projects should remain steady as they are less susceptible to cyclical factors. AIA Chief Economist Kermit Baker said, “A multitude of factors are preventing substantive growth in nonresidential construction. Stubbornly high long-term interest rates, falling consumer confidence scores, rising tariff rates for many inputs to construction and construction labor shortages exacerbated by restrictive immigration policies are limiting prospects for positive sustained growth.”
• In 2024, wood framing continued to account for nearly all of the single-family construction market, according to National Association of Home Builders (NAHB) analysis of US Census Bureau data. Wood framing was used in 94% of single-family home construction completions in 2024. Concrete framing was used in about 5% of homes completed in 2024, while steel framing, which is rare in single-family construction, was used in less than 0.5% of homes. Wood framing increased its market share by 3% in 2024 over 2023. Steel framing, while a tiny portion of the overall market, saw its share increase 33% year-over-year in 2024. The market gains of wood and steel came at the expense of concrete, which saw its share slip from 7% to 5%.

• Construction firms that work on civil infrastructure projects are holding steady as they manage uncertainties, including waning backlog growth and weaker margins, according to FMI’s third-quarter Civil Infrastructure Construction Index (CICI) survey. The CICI reading for the third quarter was 50.8 compared to 52.2 in Q2 2025 – on a 100-point scale. Any CICI reading above 50 indicates that more civil infrastructure contractors see conditions as good than poor. While about 52% of firms surveyed said their work backlogs had risen in Q3 2025 compared to a year earlier, only 25% expected backlog growth in Q4. While civil infrastructure firms expect backlogs to ease, margins remain under pressure from competitive bidding and higher costs. FMI expects firms to focus on project selection and cost controls to improve margins, as higher work volumes are a less reliable profitability boost.
• The total value of nonresidential construction put in place declined by 0.2% in July 2025 compared to June, according to the US Census Bureau. Spending on nonresidential building projects was mixed in June. Growth was led by a 0.9% uptick in lodging spending, followed by healthcare (0.5%), transportation (0.4%), and public safety (0.1%). Spending on office, educational, and communication projects was flat in July, month-over-month. Manufacturing construction spending fell 0.7% in July, and commercial projects saw a 0.8% drop. Associated Builders and Contractors (ABC) Chief Economist Anirban Basu said, “Nonresidential construction spending fell for a third consecutive month in July and is now down 2.5% from the December 2023 record high. Of course, that’s in nominal terms. With construction materials prices rising rapidly in recent months and set to continue as higher tariff rates go into effect, the recent decline in construction activity is even larger than this data series suggests.”