A Break from Historical Patterns and Current Outlook
Total U.S. construction put in place has declined seven times since 1964, and in every previous instance, the drop was tied directly to a national recession or its aftermath.
The 2025 fall-off broke that pattern, marking the first time in more than 60 years that construction contracted outside of a recession and was instead driven by its own fundamentals, including elevated interest rates, tighter lending standards and pipeline exhaustion in several private building segments. Following the confirmed 1.4% decline in 2025 and a sharp deceleration from 7% growth in 2024, FMI’s Q2 2026 forecast shows total spending remaining essentially flat this year at just under $2.2 trillion.
Eight of the 19 industry segments FMI covers are projected to contract in 2026, while a smaller group of infrastructure and institutional segments is carrying growth. Residential markets remain the most visible pressure point, with single-family spending down 2% and multifamily down 1% but stabilizing as starts recover from their 2024 trough. Commercial construction continues to contract, with retail closures outpacing openings and warehouse vacancy holding near 7%. Manufacturing is down roughly 2% as project timelines have stretched on power interconnection and equipment lead times.
Infrastructure provides the most consistent growth and the most durable demand for precast products. Sewage and waste disposal is projected up 8% in 2026 to about $57 billion. Water supply is expected to grow 5% to about $37 billion. Power construction is up 4% to about $165 billion. These segments benefit from committed federal funding, regulatory drivers and contracted demand that insulates them from the rate sensitivity that affects private development.
Cost pressures are compounding as the administration’s April 6 proclamation restructured Section 232 tariffs and added a separate 10% Section 122 surcharge on most imports. Energy costs add another layer, with Brent crude above $100 per barrel and national diesel prices toward $6 per gallon. For precast producers, elevated fuel costs directly narrow the range where products remain competitive on transportation.
Policy, Sentiment and the Road Ahead
Despite the cost pressures, the Federal Highway Administration’s manufactured-products rule continues to strengthen the domestic sourcing advantage, with a 55% domestic component-cost threshold taking effect October 1, 2026.
FMI’s Nonresidential Construction Index eased to 53.4 in Q2 2026, still in expansion territory but reflecting moderated sentiment. Our Civil Infrastructure Construction Index slipped to 50.1, essentially at the neutral line, with cost pressures cited as the primary driver.
Backlog expectations declined across both indices, signaling that while workload visibility remains solid, the pipeline is thinning in some areas. FMI’s forecast shows total construction recovering to $2.25 trillion in 2027 and accelerating beyond $2.7 trillion by 2030, but the path depends on rate relief, lending normalization and reduction in geopolitical and trade policy uncertainty.
For precast producers, the strongest near-term markets remain infrastructure segments with committed federal funding and tightening domestic content requirements, while rate-sensitive private development will stay challenged into early 2027.