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As the macro environment continues to ebb and flow, we have downgraded our 2026 outlook for total US construction starts to a 1.6% increase. TheÌýSpring 2026Ìý, released today,Ìýis driven largely by a stabilizing investment outlook, which is weaker than what we expected at the beginning of 2025.

This middling outlook is largely due toÌýÌýand continued tariff uncertainty, which has delayed planned investment for all but the largest projects as businesses wait out theÌý. This impact will be felt across all three of the major sectors.

ResidentialÌýconstruction is likely to be held back by continuing tight credit conditions, whileÌýNonresidentialÌýbuilding sectors will be harmed by depressed business demand for new structures.ÌýCivilÌýconstruction is likely to be slightly more shielded but starts will still take a hit asÌýare delayed.

What has become clear is that long-planned, very large investments have been relatively robust, highlighted by the continued performance ofÌý, while shorter-term and smaller investments have been delayed.

We anticipateÌýResidentialÌýbuilding starts will return to growth in 2026, now expected to expand 0.9%. Household headwinds seen earlier this year are likely to intensify, with inflation pressures persisting and mortgage rates offering little relief.

We expectÌýSingle-familyÌýhousing starts to rise by 1.3%, whileÌýMulti-familyÌýstarts are projected to stay mostly flat, increasing by 0.1%, as elevated financing costs continue to challenge builders and rising apartment vacancy rates raise concerns about excess capacity.

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Nonresidential and Institutional Sectors: Driven by Megaprojects

Total Nonresidential BuildingÌýactivity is forecast to grow by 1.5% in 2026, an upgrade from our previous view. A fundamental driver of this growth is expected robustness in high-valueÌýwith long planning lead times, rendering them more likely to weather changing macroeconomic conditions.

Private OfficesÌýare an example where we predict strong growth in 2026 of 48.1%, due largely to exceptionally large megaprojects, mainlyÌý. However, we think that such high levels of construction cannot and will not be sustained indefinitely; for this reason, we expect peakÌýÌýaround 2029 and a modest decline thereafter.

InstitutionalÌýconstruction is projected to decline by 3.9% in 2026, following the 5.4% contraction seen in 2025.ÌýEducationalÌýfacilities (-10.6%),ÌýReligiousÌýbuildings (-7.3%), andÌýPolice/Fire StationsÌý(-4.2%) are set for the largest contractions. The biggest gains will be in theÌýHospitals/ClinicsÌý(11.8%),ÌýPrisonsÌý(8.6%), andÌýCourthousesÌý(8.4%) subsectors.

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Commercial Construction: Large-Scale Developments Offset Constraints

CommercialÌýconstruction is projected to grow by 18.1% in 2026, a slowdown from its performance in 2025. Persistently high interest rates and ongoing concerns about overcapacity in commercial real estate remain key constraints on new development. Nonetheless, severalÌýÌýare expected to keep the sector in positive territory.

Strong growth is anticipated inÌýÌý(48.1%) andÌýTransportation TerminalsÌý(40.9%). The 48.1% growth inÌýPrivate OfficesÌýis almost entirely due to a wave ofÌýData CenterÌýdevelopments. On the downside, notable declines are expected inÌýÌý(-30.7%),ÌýLaboratoriesÌý(-28.5%), andÌýAmusementÌýfacilities (-11.6%).

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Civil Construction: Continued Growth and Policy Priorities

CivilÌýconstruction is expected to grow in 2026, continuing a period of strong performance but at a more moderate pace. In 2026, we anticipate contractions only in the airports andÌýDams/Canal/MarineÌýsubsectors.

AlthoughÌýPowerÌýinvestment faces political uncertainty, the sector remains a policy priority.ÌýMiscellaneous civilÌýis projected to grow by 12.4%, whileÌýÌýis expected to grow by 31.6%. The only other subcategory expected to grow at double-digit rates in 2026 isÌýBridgesÌýat 11.0%.

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Read the latest quarterlyÌý to get a five-year forecast of construction starts by type of structure and by state, as well as drivers influencing each building sector