AIA Cuts 2026 Nonresidential Construction Outlook to 0.3% Decline as 2027 Rebound Forecast Rises to 3.0%
Updated
Updated · aia.org · Jul 21
AIA Cuts 2026 Nonresidential Construction Outlook to 0.3% Decline as 2027 Rebound Forecast Rises to 3.0%
1 articles · Updated · aia.org · Jul 21
Summary
AIA’s forecast panel now expects U.S. nonresidential construction spending to fall 0.3% in 2026, reversing its January call for 1.0% growth.
Spending in the first five months of 2026 dropped 7% from a year earlier, prompting the downgrade as tariff and trade-policy uncertainty delays large multiyear projects.
Manufacturing took the biggest hit: AIA now sees an 11.6% decline in 2026 after a 6.7% drop in 2025, as spending normalizes after CHIPS Act and Inflation Reduction Act-driven surges.
Commercial construction improved to a 4.8% growth forecast for 2026, but that strength is driven largely by data centers; excluding them, the sector would shrink 1%.
Institutional building stayed relatively steady at 2.8% growth for 2026, and AIA raised its 2027 overall forecast to 3.0%, led by public projects, healthcare and AI-linked investment.
With AI data centers masking a massive commercial real estate slump, what happens when the tech construction boom finally cools down?
Since nominal spending hides a steep inflation-adjusted decline, are U.S. builders quietly facing a much deeper recession than official forecasts suggest?
As the historic manufacturing boom normalizes, will crippling labor shortages and hidden tariff costs completely derail the promised 2027 construction rebound?