The State of Construction at the End of 2025

As we are headed to the New Year and as technology predictions fly around as freely as Halloween candy did last week, we must stay grounded in the core trends impacting the day-to-day operations of construction companies. We must consider the overall market, the workforce trends, and new opportunities that exist (we are looking at your data centers). For today’s blog, let’s take a look at the state of the construction market at the end of 2025, so we can prepare for a bountiful 2026.

Many new reports have been released in the past few weeks looking at market trends. Let’s examine just a few of the takeaways.

Government shutdown: We would be remiss to not mention the elephant in the room—the government shutdown, which began at the beginning of October. Politics aside, this inevitably is having an impact on the construction industry.

Residential rises: Even with market challenges, new home sales posted unexpected large gain in August, remodeling market sentiment improves in the third quarter, and builder expectations rise in October, according to NAHB (National Assn. of Home Builders). Builder confidence in the market for newly built single-family homes was 37 in October, up five points from September and the highest reading since April. Still not great, but it is some progress.

Data centers drive growth: In the past year, construction backlog has declined in commercial and institutional and heavy industrial categories—but has increased significantly in infrastructure. Thus, the Construction Backlog Indicator has remained unchanged in 8.5 months, according to ABC (Associated Builders and Contractors). There are two big reasons for the significant increase in infrastructure: public sector activity and data centers. ABC says roughly one in five contractors were under contract to work on a data center project in September.

Sales, profit margins, and staffing: ABC’s Construction Confidence Index reading for sales declined in September, while the reading for profit margins and staffing both increased. The readings for all three components remain above the threshold of 50, indicating expectations for growth in the next six months.

All about that workforce: Here at Constructech, we have been writing about construction workforce challenges for years, as we recognized there was a shrinking labor force, due to many factors such as the Baby Boomers retiring and not as many new, young workers entering the profession. The research continues to show there is a shortage of workers in the construction industry.

The rise of AI (artificial intelligence): Technology touches every point of the construction lifecycle and new technologies continue to disrupt how construction companies do business. Some projections suggest the AI market could be worth more than $1.8 trillion by 2030 and $3.5 trillion by 2033. We’ll see if we hit that mark, but the bottomline is AI is here, and it is changing business.

Much of the market has changed in 2025—and much has stayed the same. New opportunities abound all around, and construction companies that recognize the changes and seize the opportunities will have a competitive advantage in the year ahead.

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