US Construction Sector NAICS 23

Apr 6, 2026 - Civil Infrastructure Backlogs Strong, Labor Remains an Issue

• The Q1 2026 Civil Infrastructure Construction Index (CICI) report by construction consulting and investment banking firm FMI shows the civil construction industry entering a period of steady expansion. The CICI index rose to 52.1 in Q1 2026 from the previous quarter, and the backlog index increased to 57.3 from 52.8, signaling strong demand and extended project visibility. Public funding and local project pipelines continue to support growth, particularly in transportation, water, and utilities, reinforcing a multiyear infrastructure cycle. However, the industry’s primary challenge is execution, not demand. Labor shortages, turnover, and productivity constraints are limiting firms’ ability to deliver work profitably, even as materials costs stabilize. As a result, civil contractors face mounting pressure to balance rising workloads with workforce capacity, operational discipline, and margin protection, making execution capability the key determinant of success in the current cycle.
• Japanese homebuilders are accelerating their push into the US housing market, betting that even a slowdown offers more growth than Japan’s aging, shrinking population, according to The Wall Street Journal. Since 2020, Japanese builders have announced or completed 23 acquisitions of U.S. single-family builders, more than double the total from 2013 to 2019, and are on track to control about 6% of the market. Major deals include Sumitomo Forestry’s $4.5 billion purchase of Tri Pointe Homes. Industry leaders cite the scale and long-term potential of the U.S. as key drivers.

• Office-to-apartment conversions in the US reached 90,300 units at the start of 2026, up 28% year over year, according to RentCafe. New York led with 16,358 units, followed by Washington, DC, and Chicago. Office buildings account for 47% of future projects, ahead of hotels at 18% and industrial properties at 16%. Remote work and high vacancy rates, near 20%, are driving the trend. Cities facing housing shortages are offering incentives, including tax breaks in New York City and Washington, D.C., and financing tools in Chicago. Additional projects are planned across major metros, including Atlanta, Cleveland, Dallas, Denver, and Philadelphia, as officials view conversions as a strategy to address housing demand and revive downtown areas.
• The New York Times reports that Americans are expected to spend a record $522 billion on home renovations in 2026, driven by high mortgage rates, aging housing stock, and shifting homeowner preferences, according to the Harvard Joint Center for Housing Studies. Elevated borrowing costs are prompting many homeowners to stay in place and invest in upgrades rather than move, while multigenerational living is increasing demand for modifications. Younger homeowners are playing a growing role, with millennials spending about $14,199 per household on improvements, the highest among generations, according to Angi. In a recent survey by online renovations platform Houzz, 41% of homeowners renovate due to dissatisfaction with existing styles, reflecting a focus on personalization. Industry data indicates functional upgrades, such as exterior repairs and system replacements, often deliver the highest returns, though lifestyle-driven renovations continue to gain popularity.