CONSTRUCTION SPENDING EDGES UP DECEMBER DESPITE DECLINES IN MULTIFAMILY AND INFRASTRUCTURE AS THREAT OF LOOMING TARIFFS WEIGHS ON INDUSTRY

Total Spending Up from November at $2.19 Trillion Seasonally Adjusted Annual Rate amid Strong Demand for Single Family Housing and Data Centers, Association Officials Urge Speedy Negotiations

Construction spending rose slightly from November to December thanks to growing demand for single-family houses and data centers, according to an analysis of a new government report that the Associated General Contractors of America released today. Association officials noted, however, that a flurry of recently announced tariffs during the weekend and today could impact future construction spending.

“Despite declines in a few segments, construction demand remains relatively strong,” said Jeffrey Shoaf, the chief executive officer of the Associated General Contractors of America. “But increasing the cost of a range of construction materials will prompt contractors to raise bid prices, potentially undermining future demand for projects.”

Spending totaled $2.19 trillion at a seasonally adjusted annual rate in December. The figure inched up 0.5 percent from the upwardly revised November rate and 4.3 percent above the December 2023 level.

Private residential spending rose 1.5 percent for the month and rose 6.0 percent from December 2023. Single-family homebuilding rose 1.0 percent from November but slipped 0.8 percent year-over-year. Spending by homeowners on additions and renovations rose 2.6 percent for the month and 21.9 percent year-over-year. But multifamily construction fell 0.3 percent in December and 10.5 percent from a year earlier.

Private nonresidential spending was up 0.1 percent from November and up 2.3 percent year-over-year. Spending on data centers, which the Census Bureau includes in office construction, jumped 0.9 percent for the month and 44.5 percent from a year earlier. Private office construction other than data centers grew 1.2 percent in December and 12.8 percent year-over-year.

Public construction spending fell 0.5 percent for the month and rose 4.3 percent over 12 months. Among the three largest segments, highway and street construction rose 0.7 percent in December but fell 5.0 percent year-over-year, education construction fell 0.6 percent for the month but rose 5.8 percent year-over-year, and transportation spending declined 1.3 percent in December but increased 3.0 percent from a year earlier.

Association officials noted that the recently released AGC of America/Sage 2025 Construction Hiring & Business Outlook revealed that potential tariffs and their impacts on materials prices were among firms’ top four concerns in 2025. Any tariffs that are ultimately put in place with trading partners, including Mexico and Canada, are likely to increase the costs of construction and harm construction employers who are forced to absorb cost increases because they are locked in contracts, sometimes that were signed several years ago.

“We are working with the Trump administration to explain the negative impacts of inflation has had on our industry, particularly these few years,” Shoaf said. “Hopefully the administration will be able to rapidly resolve the underlying concerns driving the new tariffs so our members can help build an even stronger economy.”

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CONTACT: Brian Turmail
(703)459-0238;