U.S. Construction Spending to Decline 3.4 Percent in 2026
Construction firms face a cooling market as residential and office demand wanes despite surging data center activity.
Updated on Oct. 16, 2026 in Construction
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Total U.S. construction spending is projected to reach $2.167 trillion in 2026, marking a 3.4 percent decline from current levels. While residential and manufacturing segments face projected downturns, construction firms will see divergent opportunities in specialized infrastructure sectors like data centers.
Why it matters
Construction firms face rising operational challenges as input prices remain 7 percent higher than year-ago levels while 87 percent of businesses continue to struggle with open craft positions. These trends are forcing a shift in resource allocation toward high-growth sectors, despite broader market contraction.
Total construction spending is projected at $2.167 trillion for 2026, reflecting an overall 3.4 percent decline. Industry pressure is captured by the FMI Nonresidential Construction Index, which dipped to 51.7 in the fourth quarter.
The players
FMI
A management consulting firm providing research and financial analysis for the engineering and construction industry.
The details
Growth in data center construction, projected to rise 49 percent, is driven by sustained demand for digital infrastructure and artificial intelligence hardware. Conversely, manufacturing construction faces a nearly 20 percent decline. Operational timelines across the industry remain constrained by persistent equipment delivery delays and electrical infrastructure limitations that complicate project execution.
Timeline
2026 marks the projected period for the 3.4 percent decline in total U.S. construction spending.
2027 serves as the outlook year for an 8.1 percent increase in power construction spending.
2030 represents the horizon where data center spending could reach $144 billion.
Market Landscape
The FMI Nonresidential Construction Index measures sentiment that accurately tracks the divergence between cooling traditional office builds and surging data center infrastructure requirements. This 2026 forecast follows the established pattern of declining sentiment, which recently hit 51.7.
Operators should reevaluate procurement strategies to account for input costs that remain 7 percent above year-ago levels. Managing project timelines will require closer coordination with suppliers to mitigate equipment delivery delays as power and digital infrastructure segments continue to pull limited craft labor.
The takeaway
The construction industry is bifurcating between traditional sectors like office and manufacturing, which face significant contraction, and high-growth digital infrastructure. Track the FMI Nonresidential Construction Index to monitor the threshold where sentiment shifts across these specific sub-sectors.
Further reading
For broader trends in industry health and project delivery, see our Construction section.
Source note: This article includes information reported by Walls and Ceilings Magazine.
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