US Construction Sector NAICS 23

        US Construction Sector

Unlock access to the full platform with more than 900 industry reports and local economic insights.

Get Free Trial

Get access to this Industry Profile including 18+ chapters and more than 50 pages of industry research.

Purchase Report

Industry Summary

The 801,704 construction sector establishments are involved in the clearing and preparation of land; building of structures and infrastructure; installation of mechanical systems, nonstructural components and finishings; and the remodeling and expansion of existing structures. The sector is segmented into construction of buildings (residential and nonresidential), heavy and civil engineering, and specialty trades.

Dependence on the Economy and Market

Demand for construction is highly dependent on economic health and can vary considerably across markets.

Seasonal and Weather-Related Factors

Seasonality and weather conditions affect project timelines and contractors’ ability to perform work.


Recent Developments

May 2, 2025 - Home Builders Boost Incentives to Lure Wary Buyers
  • US home builders are dangling more incentives to close deals amid a tepid spring home-buying season that is halfway over, according to The Wall Street Journal. Builders typically notch 40% of their annual sales during the spring, but mortgage rates that are stuck around 7% and a lack of affordability have reduced demand. Builders have increased incentives to bring buyers off the sidelines, including mortgage-rate buydowns, design upgrades, and price cuts. In the first two weeks of April, incentives offered by builders equaled 7.2% of the purchase price, up from 6.1% in January, according to data from John Burns Research & Consulting. Incentives are eating into builder profits during a season that usually sees few discounts, and prices tend to rise. Soft demand for new homes is expected to worsen as the effects of tariffs take hold, potentially adding between $5,000 and $15,000 to the cost of a new home.
  • North American construction and engineering spending in 2025 is expected to grow by 2% after increasing an estimated 7% in 2024, according to FMI’s second-quarter 2025 North American Engineering and Construction Outlook. Nonbuilding construction will lead growth in 2025, supported by solid public funding commitments with bipartisan support. Water projects will lead infrastructure spending growth in 2025 with a rise of 8%, followed by power (6%), sewage and waste disposal (6%), and highway and street (2%). Single-family construction spending is forecast to rise by 3% in 2025, but headwinds include higher costs due to materials tariffs, tighter immigration enforcement, and a lack of affordability. A recent jump in new apartment supply and unfavorable cost conditions will reduce multifamily spending by 12% in 2025. Nonresidential building construction spending will be flat in 2025, as steady growth in segments including amusement and recreation, educational, transportation, and communication will be offset by weakness in lodging and commercial.
  • More clean energy-related projects are being paused, downsized, or cancelled due to policy shifts under the Trump administration, according to Manufacturing Dive. In the first quarter of 2025, companies announced $8 billion in project downsizing and cancellations, according to E2, a clean-energy nonprofit that tracks and releases monthly updates on green energy project announcements. In all, 16 projects were cancelled in the first quarter, including solar, wind, and electric vehicle plants. After the passage of the Inflation Reduction Act (IRA) in 2022, the law’s tax credits for clean-energy manufacturing projects and direct funding and loan financing attracted billions in climate-related investments. However, on his first day in office, President Trump froze funding under the IRA pending government review. Trump has been critical of EV tax credits under the IRA, as well as a Biden-era executive order calling for EVs to make up half of US auto sales by 2030. The clean energy sector is also bracing for the impact of tariffs, which would drive up project costs for key inputs, including EV battery and solar cell components.
  • The total value of construction put in place decreased 0.5% in March compared to February, according to the US Census Bureau. Spending on nonresidential projects fell 0.5%, and residential spending declined by 0.4%. Within the nonresidential segment, 11 of 18 construction subcategories saw spending decline, including healthcare (down 1.8%), lodging (-1.3%), office (-1.2%), commercial (-1%), and educational (-0.8%). Spending was also weaker for power, highway and street, sewage and waste disposal, manufacturing, and communication. Pockets of spending growth included transportation (up 1.2%), public safety (+0.7%), conservation and development (+0.5%), water supply (+0.3%), and amusement and recreation (+0.1%). Associated Builders and Contractors Chief Economist Anirban Basu said, “Data center investments, which accounted for more than 70% of the increase in private nonresidential construction spending between March 2024 and March 2025, are perhaps the only remaining source of industry momentum. Manufacturing construction, while still elevated, has wavered in recent months. Most commercial segments remain subdued under the weight of high borrowing costs and tight lending standards. Residential construction continues to slide.”

Industry Revenue

US Construction Sector


Industry Structure

Industry size & Structure

The construction sector is comprised of 801,704 establishments that employ 8 million workers and generate $3 trillion in annual revenue, according to government sources.

    • The construction sector represents 4% of the nation's Gross Domestic Product (GDP) and employs 5% of the country's workers.
    • The specialty trade contracting segment is highly fragmented: the 50 largest specialty trade firms represent 7% of segment revenue. The 50 largest building construction firms represent 20% of segment revenue; the 50 largest heavy and civil works firms represent 26% of segment revenue.
    • The construction sector has a high volume of independent contractors with no employees. The number of nonemployer establishments is about 837,826 in building construction, 38,909 in heavy and civil works, and 1.8 million in specialty contracting. The owner of nonemployer establishments typically performs the work or subcontracts labor for large or complex jobs.
    • The construction sector shed 78,000 establishments in 2021, which equals about 8.5% of existing establishments, according to the Bureau of Labor Statistics. However, the industry added 98,000 new establishments, which is equivalent to 10.7% of existing establishments. As a result, the construction sector has an average growth rate of 2.2%.
    • The construction sector is forecast to grow its employment base by 4.7% overall in 2023-2033, which is higher than the national average of 4% for all jobs, according to the Bureau of Labor Statistics.

                                    Industry Forecast

                                    Industry Forecast
                                    US Construction Sector Industry Growth
                                    Source: Vertical IQ and Inforum

                                    Vertical IQ Industry Report

                                    For anyone actively digging deeper into a specific industry.

                                    50+ pages of timely industry insights

                                    18+ chapters

                                    PDF delivered to your inbox