Spring 2025 Construction Industry Forecast
Quarterly Construction Outlook with President Alan Ferguson
Each quarter, US Assure President Alan Ferguson joins us in the studio to discuss key factors contributing to changes in the construction industry, a forecast for the coming months, and how it will impact your business opportunities.
Read the Video Transcript:
The last few months have been a waiting game for both the construction industry and US economy. With a new administration in place following November’s election, the shift has continued to spotlight economic uncertainty. A lot of the noise comes down to five topics:
- Inflation
- Tariffs
- Deportations
- Energy independence
- Manufacturing
While these factors shape the market, one fact is undeniable: the demand for housing is holding strong in the US with a home shortage of three to four million. The big unknown here is whether these factors will allow the market to meet that demand in an affordable manner. We think there is a path forward here.
Inflation, Tariffs, Deportations
Based on the most recent Federal Reserve meeting, it’s clear that tariffs, inflation and rates are interconnected. The Fed is keeping a close watch on how aggressive trade policies impact inflation, especially with the goal of maintaining a 2% target rate.
If tariff-driven inflation stays in check, we may see even more than the two rate cuts expected for the year.
As for the workforce, mass deportations haven’t yet created widespread disruption in the construction sector. If they do, labor shortages could become a growing challenge that may lead to construction delays similar to what we saw just after the pandemic.
Energy Independence, Manufacturing
Energy independence and a return to a manufacturing economy would be game changers. Lower energy costs would reduce expenses for building materials, while a boost in U.S. manufacturing could drive job growth and economic momentum.
What does the data tell us?
The latest numbers show new home construction jumped 11.2% in February to a seasonally adjusted rate of 1.5 million starts — far surpassing any expectations.
Single-family homebuilding increased 11.4% to 1.11 million starts, the fastest pace in over a year: a potential indication that builders are responding to demand despite concerns over lending rates.
While this surge in new home construction contrasts with some weaker economic indicators such as consumer sentiment and retail sales, the housing market remains a bright spot in the economy.
Looking ahead, the housing market could be turning a corner because single-family home construction is gaining momentum and builders are pushing forward despite higher costs. Uncertainty will remain for the foreseeable future; however, we believe the construction industry will play a crucial role in driving economic recovery as we move further into 2025.
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