Construction spending quietly stalls

June 1, 2026

Construction spending rose a tepid 0.4% in April after March data were revised lower. Spending is 0.9% higher than a year ago but remains below its December 2025 peak. (The data are not adjusted for inflation.)

Input prices for new construction rose 6.4% over the past year, the fastest pace in over three years. Diesel, liquid asphalt and the three key construction metals - steel, aluminum and copper - drove the increase which was bolstered by tariffs and the Iran war. Costs are climbing several times faster than spending. Adjusted for costs, real construction activity is plummeting.

Private residential construction rose 0.8% in April. Single-family residential spending increased 1.4% for the month but stayed 2.9% below year-ago levels. We do not expect single-family home construction to be a source of growth for construction spending since mortgage rates recently moved higher. Building permits have turned lower, pointing to softer activity ahead. 

More than 60% of builders are offering sales incentives, a streak that has run for over a year. Margin compression limits how much they can afford to discount. The spring selling season has come and gone without a lift. 

Multifamily spending fell 0.3%. Years of record completions have pushed rents lower and cooled appetites for new apartments. Fewer new units coming on line this year mean that rents are expected to rise again.

Private nonresidential spending fell 0.2% in April and 2.1% from a year ago. Manufacturing construction dropped another 1.2% and now sits 18.5% below year-ago levels, extending the retreat from a 2024 peak. It remains the largest nonresidential category, but utility construction is closing the gap fast. Spending on power construction climbed 6% over the year as utilities expand capacity to meet data center demand.

Data centers remain the structural growth driver, up 1.9% in April and a whopping 28% from a year ago. Together, data centers and utilities account for almost all the work in nonresidential construction. Rising energy costs, grid limitations and local opposition increasingly dictate how fast projects can move.

Public construction rose 0.4% in April and 3.7% from a year ago, trailing inflation. Highway and street construction, the largest public category, rose 0.4%. Educational construction increased 0.6% for the month but just 1.2% on the year, a decline in real terms. Public power spending stood out, up nearly 14% from a year ago.