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NEWSLETTER - December 2025: 2026 Construction Industry Outlook

  • natalia6734
  • Dec 4
  • 3 min read

Updated: Dec 6


Between rising costs, unpredictable material prices, and a tight labor market, builders and skilled-trades businesses need to make smart moves. Let’s break down what’s really going on and where to focus next, so your company stays strong heading into 2026.

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Industry Pulse 


  • Steady Growth. Construction spending is expected to grow ~4.2% in 2026, solid but not a boom. Growth will be led by infrastructure and public-funded projects, while residential construction cools off due to high interest rates. 

  • Material costs remain a challenge. Prices for key construction materials are still rising, though more slowly than before. Metals are leading the way, steel up 9%, copper 14%, aluminum 23% year over year, partly due to new tariffs.  

  • Repair & Maintenance (R&M) is staying strong. R&M work continues to outpace new construction because it’s less cyclical, when something breaks, it must be fixed regardless of the economy. That makes maintenance work a steady source of revenue even when new construction slows down. 


Why it matters: for many smaller contractors, 2026 is about being selective, focusing on steady work, protecting profit margins, and staying lean as costs and schedules stay tight

Numbers that Matter

Labor Market

  • Construction vs. U.S. economy: Construction employment is projected to grow ~4.7% over the next decade compared to 3.1% for the overall economy. 


  • Electricians: Up ~9% through 2034, nearly 3x faster than average job growth. 

  • HVAC Technicians: Up ~8% through 2034, well above national average. 


Plumbers, electricians and HVAC jobs lead the way in expected employment growth at rates about 3x higher than the overall economy. However, the labor market in the construction industry remain very tight with roughly 400-500k additional workers needed in 2026 to meet demand. This significant shortage keeps wages rising and hiring tight. Recent immigration enforcement policies have reduced the overall labor force by ~1.2 million workers, and construction is one of the sectors feeling it most. 

Material Costs

Material prices remain a mixed bag heading into 2026. As of August 2025, Metals continue to drive most of the upward pressure, with aluminum (+23%), copper (+14%), and steel (+9%) posting the biggest increases year over year. Concrete and glass remain relatively stable, but prices remain high. Lumber pricing is mixed, framing lumber is -6% YoY, while other softwood products are +5% YoY. Overall, lumber remains more volatile month-to-month than other materials. 


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Housing permits:

  • United States: 

  • 113.9k permits in Aug 2025, a 14% drop from Aug 2024  

  • 967.7k permits in 2025 Year to Date ("YTD"), a 5% drop vs 2024  

  • Georgia:  

  • 4,180 permits in Aug 2025, a 27% drop from Aug 2024  

  • 41,261 permits in 2025 YTD, a 14% drop vs 2024 YTD 

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AI on the Jobsite: What It Really Means


AI is improving productivity and decision-making in the sector, not replacing workers.


  • Augmenting, not automating. Construction and the trades remain among the least automatable industries because the work is physical, hands-on, and varies from job to job.

  • Practical uses: AI tools are being used to streamline estimating, scheduling, quality control, safety monitoring, and logistics, helping leaders make faster, data-driven decisions.

  • Human factor still critical: Field teams, project managers, and office staff all benefit AI provides better information, not substitutes for expertise.


AI in construction is about helping owners and teams work smarter across the board, from estimating and scheduling to sales, client management, and forecasting.

 

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Margin Saving Tips for 2026


Between material costs, labor shortages, and rapid technology changes, 2026 will reward contractors who stay focused, adaptable, and proactive about protecting margins. These moves will help contractors stay ahead:


  • Track job costs weekly. Compare estimated vs. actual spending and catch overruns early.

  • Reprice regularly. Outdated bids quietly erode profits. Make sure to update material prices regularly.

  • Tighten change orders. Document every change order, bake in margin and ensure approvals before work begins.

  • Diversify your revenue mix. Add repair and maintenance projects or government projects to balance slower periods and the sluggish new construction market.

  • Use AI as a workflow upgrade. Start small, in estimating, scheduling, or other admin tasks. Monitor and refine your AI tools regularly to avoid costly mistakes.

  • Prioritize cash flow over volume. In uncertain times, liquidity is more valuable than backlog size or project size. Work with customers you trust.



Valtoro Consulting helps small and mid-sized construction and skilled-trade firms strengthen margins, modernize operations, and implement customized AI tools and workflows that create measurable results.


Partner with Valtoro to make your business stronger, smarter, and ready for what’s next.

 
 
 

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