--- title: The Nonresidential Construction Sector Is Nearing an Inflection Point description: US Private Nonresidential Construction is at a record high, but various downside pressures will lead to imminent decline in the sector. image: https://blog.itreconomics.com/hubfs/BlogImage_EZ_04102025.png --- Industry Updates # The Nonresidential Construction Sector Is Nearing an Inflection Point US Private Nonresidential Construction is at a record high, but various downside pressures will lead to imminent decline in the sector. [ ITR Economics ](https://blog.itreconomics.com/blog/author/itr-economics) Apr 11, 2025 --- The US Private Nonresidential Construction 12-month moving total (12MMT) is at a record high and was rising as of February (the latest data). However, decline is imminent. The following will explain the downside pressures on Construction as well as highlight some segments of Nonresidential Construction that we expect to fare better during the coming year. # **Housing Trends** US Single-Unit Housing Starts posted steep rise in the wake of the pandemic, but subsequently declined sharply. Starts lead Nonresidential Construction by about two years; more homes mean more people, and therefore more demand for nonresidential buildings such as recreational buildings, schools, hospitals, and shopping areas. The post-pandemic decline in Starts has been weighing on Nonresidential Construction, but Construction has benefited from government stimulus and incentives, particularly in the manufacturing construction submarket due in part to the CHIPS and Science Act. With that funding sunsetting, the downside pressure will manifest, and Nonresidential Construction decline will take hold. As can be seen in the chart, the steep post-COVID-boom decline in Starts suggests that Nonresidential Construction decline is due. ![US Private Nonresidential Construction to US Single-Unit Housing Starts](https://blog.itreconomics.com/hs-fs/hubfs/US%20Private%20Nonresidential%20Construction%20to%20US%20Single-Unit%20Housing%20Starts.png?width=624&height=339&name=US%20Private%20Nonresidential%20Construction%20to%20US%20Single-Unit%20Housing%20Starts.png) Last year’s economic weakness is another factor against Nonresidential Construction. US Total Industrial Production was relatively flat during 2024. Faced with less-than-stellar performance, many companies were likely occupied with mitigating the weakness rather than planning expansions for the following year. Note that Nonresidential Construction is a measure of put-in-place spending, and it lags the overall industrial economy by about a year. If businesses were greenlighting fewer projects last year, they will be generally spending less put-in-place this year. # **Individual Markets Will Vary** While overall Nonresidential Construction will decline imminently, US Private Manufacturing Construction, which accounts for about 30% of Nonresidential Construction, will rise on a 12MMT basis for a few more months into mid-2025. The waning of CHIPS funds and other government incentives will then help tip Construction into decline. Some smaller segments of Nonresidential Construction are already declining. The retail construction sector declined throughout 2024 and is expected to undergo further weakness. Work-from-home trends have contributed to a weak office construction sector since the arrival of COVID. The sector rebounded somewhat in 2022, but it has been declining since, with more decline ahead this year. ![  Free 30-Day Trial - ITR Trends Report™   With access to more than 45 market forecasts, your business can increase its competitive advantage, identify markets for growth, and more! Ready to get started?  ](https://no-cache.hubspot.com/cta/default/4424930/interactive-185714257510.png) # **Positive Outliers** Data center construction is a positive outlier and is expected to continue to rise throughout the overall Nonresidential Construction downtrend. This will occur as AI and other tech advances march forward, stimulating demand for data processing. # **What to Do** If you are an industrial business that sells into the nonresidential sector, calculate your rates-of-change and compare them against the rates-of-change for US Industrial Production and US Nonresidential Construction. [ITR Economics can help](https://itreconomics.com/contact-us/) with all of this! Does your business move through business cycle highs and lows roughly simultaneously with Industrial Production but before Nonresidential Construction? If so, then you have likely already faced the downside pressure of Nonresidential Construction’s imminent decline, because the nonresidential sector lags the industrial economy by about a year. You should be seeing far better market conditions for your business this year, which will be reflected as stronger Nonresidential Construction trends starting in the second half of 2026. If your business trends more coincidentally with Nonresidential Construction, prepare for several quarters of weakness ahead. However, check your specific markets – not all nonresidential construction markets will trend in line with the aggregate. Again, [ITR Economics can help you here](https://itreconomics.com/contact-us/).   [Industry Updates](https://blog.itreconomics.com/blog/tag/industry-updates) ## Similar posts Industry Updates ### [An Outlier, With a Few Reservations](https://blog.itreconomics.com/blog/outlier-with-few-reservations) Private nonresidential sector will be in cyclical rise through the majority of 2023 - prepare to marshal your resources and energies accordingly. ITR Economics Dec 13, 2022 Industry Updates ### [Breaking New Ground in Nonresidential Construction](https://blog.itreconomics.com/blog/breaking-new-ground-in-nonresidential-construction) Prepare for nonresidential construction's 2026 transition with insights on labor challenges, tariffs, and regional opportunities. ITR Economics Nov 21, 2025 Solutions ### [Construction 2020: The Year Ahead for Construction Markets](https://blog.itreconomics.com/blog/construction-2020-year-ahead-construction-markets) This webinar will cover the current and future landscape for residential and nonresidential construction through 2020. Connor Lokar Oct 3, 2019 ### Free Economic Updates from ITR Economics Hear the latest economic news from our experts, stay in the know with our frequent blogs, and get a first look at ITR Economics’ latest promotions – all free with our economic updates! 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