The nonresidential construction market continued to face headwinds during the first five months of 2026 as spending fell 7% in nominal dollars compared to the same period a year earlier. Reflecting this softer market performance, the AIA Consensus Construction Forecast Panel lowered its 2026 projection from a 1.0% increase in spending, forecasted in January, to a 0.3% decline.
Despite near-term challenges, panelists expressed greater confidence in a rebound next year, increasing their 2027 spending forecast from 2.2% to 3.0%.
Manufacturing construction experienced the most significant downward revision in the current forecast. Spending in the sector is now projected to decline 11.6% in 2026, following a 6.7% decrease in 2025, with an additional 0.6% decline expected in 2027.
Despite these reductions, manufacturing activity is anticipated to remain elevated by historical standards. The projected slowdown reflects a normalization of spending following the surge in investment spurred by the CHIPS and Science Act and the Inflation Reduction Act. Adding to that moderation is ongoing uncertainty surrounding tariffs and trade policy, which can significantly influence decisions to move forward with large-scale, multiyear capital projects.
The institutional sector, driven largely by public construction activity, remains largely unchanged from the January forecast, with spending projected to increase 2.8% in 2026 and 2.7% in 2027 following 1.9% growth in 2025. Healthcare and amusement and recreation projects continue to offer the strongest growth prospects.
In contrast, the commercial sector outlook has improved since January, with spending now expected to increase 4.8% in 2026 and 5.8% in 2027. However, that strength is being driven almost entirely by surging data center construction. Excluding data centers, commercial spending would be projected to decline 1% in 2026 and grow only 1% in 2027, underscoring the widening divide within the nonresidential building market.
“The unevenness we’re seeing in construction activity reflects very different market forces at work,” said AIA Chief Economist Richard Branch. “Projects tied to public funding, healthcare needs, and AI-related investment are moving ahead, while sectors that depend more heavily on private financing and discretionary spending continue to face significant headwinds.”
| FORECAST | ||
| Percent Change | Percent Change | |
| 2026 | 2027 | |
| Nonresidential Total | -0.3 | 3.0 |
| Commercial Total | 4.8 | 5.8 |
| Office | 9.6 | 9.2 |
| Data Centers | 33.0 | 24.7 |
| Retail & Other Commercial | 0.7 | 2.7 |
| Hotel | 4.6 | 5.2 |
| Warehouse | -1.7 | 1.4 |
| Manufacturing | -11.6 | -0.6 |
| Institutional Total | 2.8 | 2.7 |
| Health | 2.6 | 4.4 |
| Education | 1.2 | 0.9 |
| Amusement & Recreation | 7.1 | 3.0 |
Click here for complete details on the latest Consensus Construction Forecast.
About the American Institute of Architects
Founded in 1857, the American Institute of Architects (AIA) consistently works to create more valuable, healthy, secure, and sustainable buildings, neighborhoods, and communities. Through more than 200 international, state and local chapters, AIA advocates for public policies that promote economic vitality and public well-being. AIA provides members with tools and resources to assist them in their careers and business as well as engaging civic and government leaders and the public to find solutions to pressing issues facing our communities, institutions, nation, and world. Members adhere to a code of ethics and conduct to ensure the highest professional standards.
