KEY POINTS
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Total U.S. construction starts are forecast to rise 2.1% in 2026, while year-to-date starts through June are up 6.5% from the same period last year.
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The outlook for Total Nonresidential construction has been upgraded, with stronger Data Center activity driven by robust artificial intelligence investment.
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Civil construction spending is forecast to grow 3.6% in 2026, with Power investment projected to increase 7.8% despite political uncertainty surrounding green energy.
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Residential starts are expected to decline 10.5%, led by weakness in Multi-Family construction and a 5.9% drop in Single-Family starts.
US CONSTRUCTION OUTLOOK
ConstructConnect and Oxford Economics have revised the U.S. construction starts forecast higher for 2026, reflecting stronger-than-expected activity during the first half of the year and additional Data Center construction.
In the ConstructConnect Autumn 2026 Construction Starts Forecast:
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U.S. GDP is forecast to grow 2.3% as a stable labor market, rapid AI investment, and a turn in the inventory cycle offset moderating consumer spending and persistent inflation.
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The baseline forecast now anticipates a Federal Reserve rate cut in September 2027, later than the December 2026 cut assumed in the prior forecast.
These economic conditions provide support for construction growth, although monetary policy is expected to remain restrictive for longer than previously anticipated.
Nonresidential Building and Data Center Growth
Total Nonresidential Building (NRB) activity is forecast to grow 8.7% in 2026, an upgrade of more than five percentage points from the previous forecast. NRB covers structures such as Offices, including Data Centers, Schools, Hospitals, and Manufacturing plants.
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Private Offices — which include Data Centers — are expected to be the fastest-growing segment, with new construction increasing 83.1%.
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Data Centers account for nearly all of the anticipated $78 billion increase in Commercial construction.
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Without the expected $77.4 billion Data Center gain, Commercial construction would show virtually no growth.
The pace of Data Center expansion is expected to moderate from 2027 through the end of the decade, setting the stage for a more mixed outlook across other nonresidential segments.
Outlook Beyond Data Centers
Beyond Data Centers, the outlook is mixed across major construction categories:
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Manufacturing construction is projected to fall nearly 43% as tariff-related capital expenditure reductions and fading federal support weigh on investment.
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Institutional construction is expected to increase 7.4%, supported by gains in Prisons, Courthouses, and Military facilities.
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Civil construction growth will moderate after two strong years, although nearly every segment except Airports is receiving an upward revision.
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Power construction is projected to rise 7.8% as investment shifts toward infrastructure priorities beyond green initiatives.
Residential Construction Outlook
Residential construction faces continued pressure from high financing and materials costs, weak rent growth, excess Multi-Family supply, and constrained buyer demand.
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New Single-Family housing permits totaled 462,000 during the first half of 2026, a three-year low.
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Additional risks include energy-price volatility tied to the Strait of Hormuz, unresolved tariff policy, and tighter construction labor supply resulting from reduced immigration.
Project Selectivity and Sector Rotation
For construction leaders, the outlook points to a market that rewards project selectivity and close attention to sector rotation.
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Data Centers and Power infrastructure remain areas of opportunity as AI investment and shifting infrastructure priorities support new activity.
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Projects outside Data Centers — including Commercial, Manufacturing, and Residential construction — face greater pressure from financing costs, excess capacity, tariffs, and softer demand.
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Project planning should account for elevated energy, materials, and labor risks, along with uncertainty surrounding trade policy and the Strait of Hormuz.
The result is a forecast suggestive of a more concentrated construction cycle in which capital and capacity continue moving toward resilient, high-value projects.
Read the latest quarterly Construction Starts Forecast Report to get a five-year forecast of construction starts by type of structure and by state, as well as drivers influencing each building sector.
About ConstructConnect
At ConstructConnect, our software solutions provide the information construction professionals need to start every project on a solid foundation. For more than 100 years, our insights and market intelligence have empowered commercial firms, manufacturers, trade contractors, and architects to make data-driven decisions and maximize productivity.
ConstructConnect is a business unit of Roper Technologies (Nasdaq: ROP), part of the Nasdaq 100, S&P 500, and Fortune 1000.
For more information, visit constructconnect.com
