Total U.S. construction starts stumbled in November 2025, but both Dodge data and industry forecasts still point to modest overall growth in 2026, with a market increasingly dominated by data centers and large public and institutional projects. Conditions will remain highly uneven by sector and region, creating a “K-shaped” construction economy where some niches boom while others stagnate.
November 2025 starts: weak month, firmer trend
Total construction starts fell 20.5% in November to an annualized $1.22 trillion, driven primarily by a sharp pullback in megaprojects rather than a broad collapse in demand. By sector in November:
- Nonresidential building starts declined 13.4%, with commercial activity down 25.8% and manufacturing plunging 50.7% month over month.
- Residential starts rose 13.3% for the month, even though year-to-date through November they remained 4.9% below 2024 levels and down 3.6% on a trailing‑12‑month basis.
- Nonbuilding (infrastructure, utilities, etc.) fell 43.7% in November, yet was still up 17.5% year-to-date and 18% on a trailing‑12‑month basis, underscoring longer‑term strength in this category.
Dodge notes there were only two projects over $1 billion breaking ground in November, and attributes much of the monthly decline to this lack of megaprojects, while emphasizing that the second half of 2025 has tracked better than the first.
Sector outlook for 2026
Nonresidential buildings: AIA’s Consensus Construction Forecast calls for inflation‑unadjusted nonresidential building spending to rise only about 2% in 2026, following roughly 1.7% growth in 2025, with the commercial segment around that pace and manufacturing projected to decline another 2.6% after a 2% drop in 2025.
Institutional facilities: Expected to be the strongest nonresidential segment, with AIA projecting gains of about 6.1% in 2025 and 3.8% in 2026, supported by large hospital, school, and university projects, many of them $200 million‑plus.
Industrial: Six of ten construction economists in the AIA survey forecast a decline in industrial construction in 2026, with estimates ranging from a mid‑teens drop to modest growth in the low single digits depending on the forecaster.
Residential: NAHB expects 2026 single‑family starts to edge up roughly 0.6% to about 950,000 units, while multifamily starts are projected to fall about 3.4% to 396,000, as high but easing mortgage rates and improving builder sentiment gradually draw buyers back.
Data centers and megaprojects: main growth engine
Data centers are now the primary growth driver in U.S. nonresidential construction, with some proposed or active projects exceeding $10 billion and one Arizona data center campus reportedly topping $30 billion in contract value. Of 34 megaprojects over $1 billion identified between July and October 2025, 13 were data centers, representing about 60% of the combined contract value of those jobs, illustrating how concentrated big‑ticket growth has become. A recent research report estimates data center construction starts could reach about $46 billion in 2025, a roughly 55% year‑over‑year increase, and projects global data center investment needs of about $6.7 trillion by 2030 to meet demand. AIA’s forecast pegs data center spending growth at over 50% in 2024, another 33% in 2025, and about 20% in 2026, while warning that electrical equipment constraints, power availability, and local opposition may temper the pace over time.
Key electrical market drivers in 2026
Pricing and tariffs: Electrical product inflation has moderated but remains uneven; as of August 2025, building wire, switchgear, and fuses were still posting double‑digit year‑over‑year price gains, and tariff risk on various equipment categories continues to cloud material cost planning.
Labor and immigration: Electrical contractor employment is near historic highs above one million workers, but recent data show some softening, and AGC’s survey indicates that about 28% of contractors reported direct or indirect impacts from stepped‑up immigration enforcement, including worker losses and site visits by immigration agents.
Financing and policy: High but easing interest rates, new federal tax cuts taking effect in 2026, and potential further rate reductions should support capital spending and make mortgages somewhat more affordable, offering a modest tailwind to both commercial/institutional work and single‑family housing.
Implications for 2026 construction and electrical work
Overall construction: On a national basis, most forecasters see low single‑digit growth in overall construction and electrical construction activity in 2026—a softer but still positive market, highly dependent on which sectors and regions a firm serves.
Geographic and sector bifurcation: Contractors and distributors tied into data centers, Sunbelt metros, airports, hospitals, and higher‑education projects are likely to see stronger backlogs, while those more exposed to general industrial, office, and multifamily will face flatter or declining volume.
Project mix: Even with a possible cooling in megaproject starts, the pipeline contains a large number of $100–$250 million jobs in transit, health care, and education, where electrical work typically accounts for at least 10% of construction cost.
Retrofit and replacement: Aging first‑generation LED systems and ongoing efficiency, controls, and electrification upgrades in existing buildings should sustain steady retrofit opportunities, particularly as new construction slows in some categories.
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