ConstructConnect US forecast data shows the South will generate $293.7 billion in 2025 nonresidential construction starts, cementing its position as the nation’s largest regional market, with activity projected to rebound to $310.6 billion by 2027.
Civil construction anchors growth, expanding from $111.4 billion in 2025 to $125.1 billion in 2027, while healthcare construction surges 46% during the same period, strengthening market resilience and diversifying opportunities across sectors.
Military and government spending are forecast to rise steadily, industrial work stabilizes at a higher baseline, and education corrects modestly, ensuring sectoral diversity supports long-term growth and contractor opportunity across the South.
The South’s nonresidential construction market is poised for sustained strength, with 2025 set to produce regional starts of $293.7 billion. This total, incorporating actual activity through July, solidifies the South as the country’s largest construction region. Although 2025 starts are down 5.0% from the 2024 high of $309.2 billion, the South still accounts for about 38% of all U.S. nonresidential construction activity.
Despite facing adjustment this year, the South is projected to rebound, with total activity forecast to reach $310.6 billion by 2027. Population growth, significant federal and state infrastructure investment, and expanding technology and healthcare sectors continue to anchor demand in the region.
For industry professionals, these factors not only support market stability but also introduce a spectrum of new opportunities across key segments.
Civil construction continues to be at the forefront of the region’s growth. Starts in 2025 are expected to total $111.4 billion, increasing to $125.1 billion by 2027 or a 12.2% gain that outpaces most other sectors. Civil’s share of the market is set to rise from 37.9% to over 40% during this period.
This scenario is underpinned by steady allocations to transportation improvements, utilities, and climate resilience. Sustained investment in infrastructure remains a primary growth engine for regional contractors.
Medical construction is expected to deliver robust performance, with starts rising 46% from $13.7 billion in 2025 to $19.9 billion in 2027. This increase reflects strong demand for new healthcare facilities and other related medical facilities across the region. The healthcare sector’s momentum will be a key contributor to overall market resilience and diversification.
Military construction in the South is set to rebound strongly, with forecasted starts increasing from $5.3 billion in 2025 to $7.0 billion in 2027. Government construction follows suit, rising 20.5% to reach $12.7 billion by 2027. These trends highlight renewed investment in defense and government sector infrastructure, fueling ongoing demand for contractors prepared to serve these markets.
After a recent cycle of manufacturing plant expansion, the industrial sector is projected to normalize. Starts are expected to decline from 14.3% from 2025 to 2027. However, unlike sharper national contractions, the South sustains a higher baseline of activity, supported by an ongoing emphasis on logistics, distribution, and advanced manufacturing.
Construction in the educational sector will see a moderate pullback, with starts forecast to decrease 4.9% from $49.3 billion in 2025 to $46.9 billion in 2027. Even with this dip, the educational sector remains an important component of the region’s construction landscape.
Across 2025 and the years ahead, continued federal infrastructure funding and evolving sector cycles are shaping the region’s outlook. The South benefits from outsized funding for transportation and utilities, providing a deep pipeline for future projects.
At the same time, the South shows greater resilience in the face of industrial and institutional corrections compared with other regions, thanks to broad-based sector diversity and substantial geographic scale. This diversity enables contractors to weather short-term slowdowns and position for market recovery.
Going into 2026 and 2027, the construction environment in the South is characterized by robust civil infrastructure investment, vigorous growth in healthcare, and expanding military and government project pipelines.
This suggests ample opportunities for contractors and building product suppliers while also signaling a need to stay agile as demand shifts across different sectors.
Competitive advantage will favor firms that can pivot among large infrastructure assignments, specialized healthcare projects, and targeted facility upgrades. Companies that adapt to evolving bidding environments, regulatory changes, and shifting demographics will find the South remains one of the most attractive regions for long-term construction growth.
Despite current recalibration, the South’s construction market demonstrates ongoing resilience, sector balance, and consistent opportunity.
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