US Construction Sector

The 801,000 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.

Aug 6, 2026 - New Housing Law May Gradually Improve Building Activity

• The New York Times reports that the 21st Century ROAD to Housing Act represents the largest federal housing effort in a generation, but it is unlikely to reduce housing costs quickly because it provides limited funding and leaves key zoning and permitting decisions to state and local governments. The law encourages cities to allow denser development, speed approvals, and use federal grants for housing construction. It also eases inspection requirements for some subsidized units, protects new build-to-rent communities from investor restrictions, removes the permanent chassis requirement for manufactured homes, and directs HUD to study modular construction reforms. These measures could eventually support the US construction sector by expanding housing demand, lowering factory-built home costs, and encouraging more efficient building methods.
• US construction and engineering spending in 2026 is expected to decline just over 1% after remaining flat in 2025, according to FMI’s third-quarter 2026 North American Engineering and Construction Outlook. Data center construction will provide the strongest demand, rising 21%, while conservation and development and religious construction each grow 13%. Residential improvements are forecast to increase 5%, supported by home equity spending and construction cost inflation. Power, highway and street, sewage and waste disposal, and several other infrastructure segments should post modest growth, with power expected to accelerate sharply beginning in 2027. Manufacturing construction faces the steepest decline, falling 17% as semiconductor and battery plants move beyond their most construction-intensive phases. Warehouse spending is forecast to decrease 10%, lodging falls 9%, and high mortgage rates and affordability constraints reduce single-family spending by 4%.
• The US hotel construction pipeline totaled 5,975 projects and 703,001 rooms in the second quarter of 2026, down about 4.9% and 4.6%, respectively, from a year earlier, according to the Q2 2026 US Construction Pipeline Trend Report by Lodging Econometrics. Despite the overall decline, new project announcements in Q2 2026 rose 18%, and construction starts increased 14%. Upper midscale and upscale hotels accounted for 59% of projects, while luxury and upper upscale pipelines reached record levels. Hotel conversions also increased 15% to a record 1,567 projects. Lodging Econometrics expects 661 hotels to open in 2026, up 1.3% from 2025, with openings accelerating to 738 in 2027 and 832 in 2028.
• Home remodeling spending growth is expected to slow through mid-2027, according to the Leading Indicator of Remodeling Activity (LIRA) report released in July by the Joint Center for Housing Studies at Harvard. Homeowner spending on improvements and repairs is expected to increase by 2.1% to $517 billion in the third quarter of 2026, compared with Q3 2025. In the fourth quarter of 2026, remodeling spending will again rise by 2.1% from Q4 2025 to $520 billion. Spending growth will then slow to 0.7% in the first quarter of 2027, reaching $524 billion. In the second quarter of 2027, year-over-year spending is forecast to rise just 0.5%, dropping to a total of $519 billion. Remodeling, permitting, and building product sales have remained flat recently, and remodeling activity growth is projected to remain sluggish absent a rebound in US home sales.

Industry size & Structure

The construction sector is comprised of 801,000 establishments that employ 8.3 million workers and generate $3.1 trillion in annual revenue, according to government sources.

• The construction sector represents 5% 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 22% 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 948,568 in building construction, 40,315 in heavy and civil works, and 1.9 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 5.2% overall in 2024-2034, which is higher than the national average of 3.1% for all jobs, according to the Bureau of Labor Statistics.