Summer 2026 Construction Forecast

Each quarter, US Assure CEO and 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:

Welcome to the Builders Risk Outlook.

At a high level, the U.S. construction market for the remainder of 2026 can be described as stable — but not fully rebounded. 

After shrinking in 2025, total construction activity is expected to grow at a modest 1 to 2 percent this year. 

But that top-line stability masks a much more fragmented story underneath.

In this installment, we’ll take a look at:

• The macro forces shaping construction activity
• Where growth is concentrated and where it’s lagging
• Key differences across residential, nonresidential and infrastructure
• And what to watch in the second half of the year

For builders risk insurance, new business isn’t entirely stationary but it does need a targeted approach. The defining feature of 2026 is not broad-based expansion, but rather a selective recovery driven by specific sectors and project types. 

Macro Environment

At the macro level, several structural factors continue to shape the industry.

Interest rates remain elevated, though they’ve eased slightly, which limits financing and dampens demand for new projects.

Labor shortages are widespread and persistent, constraining builders’ ability to execute even where demand exists.

On top of that, tariff-related cost pressures and policy uncertainty are still impacting how and when projects move forward.

Together, these issues hamper consumer confidence and builders’ appetite for risk. For agents, this could mean greater importance on asking timing questions relevant to when work will begin, the construction timeline and even scope changes throughout the project.  

Residential Construction

Residential construction is one of the weakest segments in the market right now. There are expectations for modest improvement, especially in single-family housing.

But, affordability continues to be the biggest constraint due to high mortgage rates and elevated home prices. Regardless, remodeling continues to be a bright spot for agents even when new construction is slower.

Meanwhile, multifamily construction is largely flat or slightly declining. Tighter credit conditions and higher vacancy rates are beginning to weigh on new starts. So, while underlying demand for housing is still strong, growth is limited.

Nonresidential Construction

On the nonresidential side, the market is moving at two very different paces.

Growth is concentrated in a handful of high-performing areas — particularly data centers, healthcare, institutional and energy-related projects. These areas are benefiting from long-term demand drivers and large-scale investment pipelines.

At the same time, traditional commercial segments such as offices, retail and lodging continue to lag as they’re hampered by changes in space utilization, financing challenges and weaker business demand.

So, while overall nonresidential spending may hold steady or even grow modestly, opportunities are highly concentrated rather than broadly distributed.

Infrastructure

Infrastructure continues to be the most reliable source of construction activity in 2026. Publicly funded projects such as water systems, transportation and energy are supporting a consistent pipeline of work.

That said, there are some risks to watch heading into late 2026 and beyond. One particular area of concern is related to the timing and potential expiration of federal funding programs. 

Another important trend is the shift toward fewer—but larger and more complex—projects.

These megaprojects, especially in infrastructure and data centers, are driving a disproportionate share of activity. While this supports overall spending, it also introduces greater risk given longer timelines, higher costs and increased exposure to delays and operational challenges.

Looking Ahead

Looking ahead to the second half of 2026, the construction outlook is modestly more positive, but still uncertain. If financing conditions continue to ease and policy becomes clearer, some areas of nonresidential activity could gradually pick up.

But overall, growth is expected to remain uneven, and the broader market is unlikely to experience a strong cyclical rebound within the year.

For agents, this means builders risk opportunities haven’t disappeared. Growth is concentrated in specific sectors, and outcomes are still shaped by labor shortages, cost pressures and financing challenges.

Whether with personal or commercial lines clients, the best leads may come from the people already in your network. The key is being strategic about where you focus outreach and asking the questions to identify projects that are planned, funded or ready to move forward.  

See ya next time.

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