After two years of volatility, the construction market is entering 2026 with a steadier headline — but a far more complicated reality underneath. Total U.S. construction put in place is projected to reach roughly $2.2 trillion, up just 1% following a slight decline in 2025. On paper, that looks like a stable year. In practice, it signals a market that is reorganizing rather than expanding.

Key signals to watch this year:

1. Sector-level divergence is widening. Nonbuilding structures are projected to lead again, up 4% in 2026. Nonresidential buildings are flat overall and residential improves modestly. A few segments are carrying momentum, while several private building segments remain soft.

2. Activity is concentrated by segment, sub-segment and metro, and into megaprojects. Data centers are driving the office category, with 2025 spending up 35% to about $42 billion and 2026 projected up 23% to about $52 billion. In many metropolises, an increasing share of investment is showing up in $1-billion+ programs, which concentrate labor, permitting capacity, power interconnections and long lead equipment.

3. Constraints are dictating who wins the work. Labor capacity and availability, permitting timelines and equipment lead times are an increasingly important filter. Even firms that are not competing for data centers or megaprojects can feel the spillover as the same skilled trades and supply chains get pulled into fewer, but larger projects.

Where growth and demand are holding up:

  • Power: Projected up 5% in 2026 to about $164 billion, supported by grid reinforcement and reliability work, with investor-owned utilities planning more than $1.1 trillion of capital investment through 2030.
  • Transportation and public institutions: Transportation is projected up 3% in 2026 to about $71 billion. Select public institutional work, including hospitals and education, is providing steadier baseline demand in many markets.
  • Water and wastewater: Sewage and waste disposal is projected up 8% in 2026 to about $56 billion. Water supply is expected to rise 5% to about $37 billion, with added pull from data center cooling demands and process-intensive manufacturing.

Segments under pressure:

  • Multifamily: Down 9% in 2025 to about $125 billion, and 2026 is projected to drop another 2% as financing and insurance costs keep new starts muted even as vacancies begin to stabilize. This remains one of the most interest-rate sensitive segments.
  • Commercial and warehouse: Commercial was down 9% and down 12% for warehouse in 2025, with 2026 projected down further for both as vacancy and underwriting discipline limit ground-up work. Again, interest rate sensitivity keeps recovery tied to lending terms.
  • Manufacturing: Down 6% in 2025 to about $221 billion and projected down 3% in 2026 to about $215 billion as project timelines stretch, and utilities and equipment lead times stay on the critical path. Manufacturing is increasingly sensitive to trade policy. Tariff disruption last year and a recent 2026 Supreme Court ruling on IEEPA tariffs could trigger policy responses that delay procurement, reset pricing and disrupt schedules.

What does this mean for precast producers and adjacent stakeholders?

  • Be more selective on bids where the schedule and procurement risk are rising.
  • Expect more work to arrive as $1 billion+ programs.
  • Treat “office” growth as data centers and target power, water and site scopes.
  • Lean into infrastructure and institutional segments with better funding durability.
  • Standardize execution controls, including staffing, procurement tracking and quality.

On a positive note, industry sentiment improved entering 2026. The Nonresidential Construction Index rose to 54.5 in Q1 2026 from 47.9 in Q4 2025, and the Civil Infrastructure Construction Index increased to 52.1 from 50.6. Further detail is posted on the FMI indices page. The path forward is less about predicting the market and more about choosing work you can deliver cleanly.

FMI’s first quarter 2026 forecast is based on third quarter 2025 Census actuals and fourth quarter assumptions. Year-end 2025 data will be released by the U.S. Census Bureau early this spring and featured in our Q2 Outlook.

Read the full 2026 Overview report for deeper segment-by-segment trends and implications.

Brian Strawberry, a chief economist in the construction industry, leads FMI’s efforts in market sizing, forecasting, building products and construction material pricing, and consumption trends. He focuses on primary research methods, including the implementation and analysis of surveys and interviews. Brian also leads and manages various external market research engagements and constructs tools and models for efficiently performing high-quality analyses.