AIA’s Updated Consensus Construction Forecast Sees Slow Growth Through 2026

Each year, the American Institute for Architects (AIA) publishes one of the very best construction forecasts in the market in its Consensus Construction Forecast and the forecasts that it develops from 10 construction economists. It’s a must-read and is available in its entirety at www.aia.org.
The July 2025 update of AIA’s  annual forecast offered a rather sobering take on where the construction market may be headed for the rest of 2025 and into 2026. It said in part: 
“There is some good news and some bad news in the latest outlook for nonresidential construction spending on buildings, according to the latest AIA Consensus Construction Forecast. First the good news: In spite of stubbornly high long-term interest rates, inflation rates stalled above the Federal Reserve Board’s target, falling consumer confidence scores, disappointing levels of home building activity, rising tariff rates for many inputs to construction and construction labor shortages exacerbated by restrictive immigration policies, the outlook for the remainder of the year and into 2026 is largely unchanged from where it was at in the beginning of the year.  
“The bad news: The outlook for spending entering the year was very pessimistic. The consensus is that overall spending on nonresidential buildings not adjusted for inflation will increase only +1.7% this year and grow very modestly to just +2% next year.
“The commercial sector outlook is about on par with the broader industry, with a projected +1.5% increase this year rising to +3.9% in 2026. Spending on the construction of manufacturing facilities—the industry bright spot in recent years—is expected to decline -2% this year, with an additional decline of -2.6% next year. Institutional facilities are expected to be the strongest sector with projected gains of +6.1% this year and another +3.8% in 2026.”