United States, September 4, 2025
News Summary
Construction spending in the U.S. decreased by 0.1% in July, totaling an annualized rate of $2.14 trillion. This decline is driven by reduced investment in private nonresidential and multifamily projects, compounded by labor shortages and tariff impacts. While public nonresidential spending increased, single-family home construction showed only a slight uptick. Experts predict ongoing challenges for the industry as new residential construction permits drop, reflecting a softening market with significant hurdles ahead.
U.S. Construction Spending Sees Minor Dip in July
In July, construction spending in the United States slightly decreased by 0.1% compared to June, bringing the total to $2.14 trillion when adjusted for seasonal fluctuations. This decline primarily stemmed from reduced expenditures in private nonresidential and multifamily construction, which overshadowed modest gains in single-family homebuilding and funding for public infrastructure projects.
The news comes amid a turbulent landscape for the construction sector, marked by labor shortages and the lingering effects of tariffs. A recent survey conducted by the Associated General Contractors of America (AGC) revealed that 16% of contractors faced cancellations, delays, or reductions in projects due to fluctuating demand linked to tariff policies. Additionally, 45% of firms reported that labor shortages contributed to project delays, indicating a considerable impact on the overall workflow in the industry.
Current Spending Trends
Breaking down the statistics further, spending on private nonresidential construction decreased by 3.7% over the past year, signaling a tough market for commercial projects. Meanwhile, investments in public nonresidential construction showed resilience, rising by 3.1% year-over-year. Notably, commercial construction spending fell by 0.9% in July, along with manufacturing and private power construction experiencing a setback of 0.7%. Furthermore, multifamily projects also saw a decrease of 0.4%.
In contrast, single-family home construction experienced a slight upward trend, with spending rising by 0.1%. However, overall construction spending shows signs of struggle when viewed over a broader timeline, with expenditures down by 2.8% when compared to the previous year.
Market Implications
The AGC has underscored the necessity for policy certainty to stimulate new construction efforts. High tariff rates and persistent labor shortages have significantly hindered project feasibility, making it challenging for contractors to plan ahead. Moreover, the American Institute of Architects (AIA) reported a concerning billings index score of 46.3 for July. Scores below 50 indicate a decline in billing activity, and this score has remained under 50 for 31 out of the past 34 months, hinting at a softening business climate for architecture firms.
According to AGC’s chief economist, the downward trend has been consistent, with no private segments showing signs of momentum as we approach the end of 2025. The construction industry faces a challenging second half of the year, with the potential for further activity declines.
Future Outlook
Amidst these challenges, July also saw a decline in new residential construction permits, raising further concerns about future spending in the industry. While the starting of new builds increased, suggesting some optimism, the overall future remains uncertain. The decline in new home sales by 8.2% in July compared to the same month last year reflects reduced market activity, indicating additional pressure on the construction market.
While the S&P CoreLogic Case-Shiller Index showed a year-over-year increase in national home prices by 1.9%, this is the slowest growth observed since the summer of 2023, further complicating the landscape for prospective buyers and builders alike.
FAQ Section
What has caused the recent dip in construction spending in the U.S.?
The recent dip in construction spending is primarily attributed to decreases in private nonresidential and multifamily construction, coupled with labor shortages and tariff-related challenges which have led to project cancellations and delays.
How does the construction spending in July compare to previous months?
In July, construction spending saw a slight decrease of 0.1% compared to June. Trends over the past year indicate an overall spending reduction of 2.8% compared to the same month last year.
What areas of construction are seeing growth despite the dip?
While overall spending has dipped, public nonresidential construction saw a year-over-year increase of 3.1%, and single-family homebuilding experienced a minor rise of 0.1% in July.
Deeper Dive: News & Info About This Topic
Additional Resources
- Construction Dive
- Tri-Cities Business News
- Business Record
- Quartz
- MDM
- Wikipedia: Construction Industry
- Google Search: U.S. construction spending
- Google Scholar: Construction spending
- Encyclopedia Britannica: Construction
- Google News: Construction spending July 2025
Author: Construction TX News
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