USA CONSTRUCTION SPENDING AND EMPLOYMENT FORECAST 2025
Past president Barry Hiscox continues the Letter from America series
The uncertainties and impreciseness regarding the financing of the construction industry that surround the current administration notwithstanding, it is relevant to note the latest conclusions and report of the associated builders and contractors (ABC), which this year celebrates its 75th anniversary.
The ABC currently has more than 23,000 members distributed under 67 chapters throughout the US and is thus a very good indicator of the construction industry here. Its 2025 report principally concludes that US$1bn in additional construction industry spending creates 3,550 new construction jobs, and the industry this year needs to attract 439,000 workers, rising to 499,000 for 2026, in order to redress increasing shortages.
ABC chief economist Anirban Basu has stated that, unless these goals are met:
“Industry-wide labour cost escalation will accelerate, exacerbating already high construction costs and reducing the volume of work that is financially feasible. Average hourly incomes throughout the industry are up 4.4% over the preceding 12 months, significantly outpacing earnings.”
It is further politically relevant to note that faster than expected immigration over the past few years has also bolstered labour supply. Thus, any proposed radical changes to immigration policy will undoubtedly affect the abiity to supply the construction workforce with the necessary skills and trades to achieve the forecast progress potential.
The US construction industry thrives when the necessary 8.3 million workers are given the opportunity to build with fewer obstacles. Solid growth is expected in construction output, amounting to 3.6% in 2025 and 4.4% in 2026, in particular highlighted by civil engineering works as a direct result of the Infrastructure Investment and Jobs Act, coupled with forecast lower interest rates supporting residential construction.
Any proposed radical changes to immigration policy will undoubtedly affect the ability to supply the construction workforce with the necessary skills and trades to achieve the forecast progress potential.
Unfortunately, this optimism cannot be said of the solar-related construction segment. Incentives, subsidies and projects in the solar space will contract due to the Trump administration reverting to an environmentally unfriendly policy of increase in the use of fuels producing greenhouse gases.
Current tariff policies affect the cost of building construction. Confidence among US home-builders slid in March 2025 to the lowest level since August 2024 as a direct result of worries about the imposition of tariffs upon imported materials. An index of housing market conditions produced by the National Association of Home Builders, together with Wells Fargo, fell by three points from 42 to 39, weaker than all estimates indicated in a Bloomberg survey of economists.
Current sales of single family homes and prospective buyer traffic dropped to their lowest levels since end of 2023. Builders continue to face elevated building material costs exacerbated by not only tariff issues but also supply side challenges, including labour and lot shortages. The mood among contractors has become more guarded since the election, which promised to cut regulation and support faster growth in the economy.
The risk is high that the cost of building materials, particularly lumber, will remain elevated, resulting in maintenace of high house prices, notwithstanding the fact mortgage interest rates are now low. In March 2025, a survey revealed the political effect on house prices resulted in an average price increase per unit amounting to $9,200. Builder confidence fell in all regions, including the west, where it dropped to its lowest level since December 2023.