Residential Construction
The residential construction market is poised for growth heading into 2025, at an increased rate of 3.4%. According to Statista, the demand for new home builds is driven by population growth, urbanization, and changing demographics. In addition, various government incentives, including affordable housing programs and tax incentives, continue to support residential construction.
Remodeling and Renovations
In projections from the Congressional Budget Office (CBO), housing starts will average 1.6 million per year over the next 10 years. Home renovation and repair spending is predicted to increase in 2025 after dipping in 2024. Harvard University’s Leading Indicator of Remodeling Activity forecasts annual spending will climb back to a yearly rate of $461 billion next spring after falling to $450 billion this year.¹
Commercial Construction
According to the American Institute of Architects (AIA), the commercial construction sector expects to experience slower growth than residential construction. The AIA projects that spending on nonresidential buildings will grow by just over 1% in 2025.
However, specific subsectors, such as healthcare, education, and data centers, are anticipated to see significant investment. For example, investment in healthcare construction is crucial to address aging populations and ongoing public health challenges. The increasing reliance on digital infrastructure will spur the construction of data centers and technology hubs. The rise of cloud computing and 5G technology will be major contributors to this growth.
Furthermore, there is an increasing emphasis on sustainable and energy-efficient buildings driven by government policy and market demand. Green building certifications and environmentally friendly materials will play an important part in commercial construction projects.