US Construction Sector
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
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.
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
US Construction Sector Industry Growth
Recent Developments
Apr 3, 2025 - Construction Spending Rises, but Tariffs Flash Warning Signs
- 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%, and residential spending grew 1.3%. Within the nonresidential segment, pockets of spending growth included conservation and development, which saw growth of 2.3% over the previous month, followed by water supply (1.6%), amusement and recreation (+1.3%), highway and street (+1.2%), and commercial (1.2%). February’s construction spending gains were led by a surge in single-family homebuilding as mortgage rates moved lower. The February results beat the expectations of economists polled by Reuters, who forecasted a 0.3% rise in construction spending. However, uncertainty surrounding the implications of the Trump administration’s tariff policies could present a headwind for the construction sector, according to Reuters.
- Home builder confidence in the single-family market dropped in March 2025 amid mounting concerns about tariff threats, higher input costs, and economic uncertainty, according to the National Association of Home Builders (NAHB). As measured by the NAHB/Wells Fargo Housing Market Index (HMI), home builder sentiment dropped three points to 39 in March from 42 the previous month. Any HMI reading over 50 indicates that more builders see conditions as good than poor. While builders still face headwinds, including high materials costs being made worse by trade strife and labor and lot shortages, the industry is encouraged by the Trump administration’s emphasis on reducing regulations.
- Some home builders are buying up extra lumber, fixtures, appliances, and other materials ahead of Trump administration tariffs, but the strategy could prove risky if high home prices keep buyers away, according to The Wall Street Journal. Some builders are pivoting to less expensive materials or reducing home sizes to offset the potential rise in materials costs brought on by tariffs. Industry observers suggest large home builders are better shielded from tariff-related uncertainty as their size gives them greater buying power to resist price hikes. However, smaller builders are more vulnerable. Building stockpiles of supplies presents risks for builders and distributors if demand dips and they are stuck holding unsold inventory. The National Association of Home Builders estimates that tariffs could increase the cost of building a single-family home by $7,500 to $10,000.
- Raids by Immigration and Customs Enforcement (ICE) are prompting some foreign-born workers to stay home from their workplaces, disrupting key industries that rely on migrant workforces, including construction, according to The Wall Street Journal. The Trump administration has said that while it is focusing on undocumented people with criminal backgrounds, anyone in the country illegally faces increased risk. According to an analysis of US Census Bureau data by the American Immigration Council, undocumented immigrants make up about 14% of the US construction sector’s workforce. The Associated General Contractors of America said it had received anecdotal reports of rising absenteeism from member firms in several locations, including Florida, Georgia, Oklahoma, and Texas. Labor disruptions reduce construction firms’ ability to deliver projects on time.
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