Construction spending is soft overall, but nonresidential work is holding up better
Softening
What changed
U.S. construction spending ran at a seasonally adjusted annual rate of $2.158 trillion in July, down 0.5% from June and 3.8% from July 2025. Spending for the first seven months of 2026 was 3.5% below the same period last year. Private residential construction fell 1.3% in July to an $859.0 billion rate, while private nonresidential construction rose 0.4% to $755.2 billion.
The national total is soft, but residential and nonresidential work are moving differently.
Why it matters
A residential remodeler and an industrial electrical contractor can be in completely different markets even though both are “construction.” Staffing, equipment and pricing decisions should follow the part of the market you actually serve and the backlog in your area.
What it means for your business
Split your pipeline into residential, commercial and public or institutional work. Track proposals, wins and months of backlog for each. If residential leads are softer, first find out whether the change is in lead quality, financing sensitivity or project size before cutting prices.
If nonresidential work is stronger locally, test one adjacent customer segment that fits your crews and equipment. There is no need to reinvent the whole company because one national category is holding up better.
What to watch
Watch local bid volume, permit activity, backlog conversion and gross margin by project type. Total quoted dollars can look healthy while the mix underneath is getting worse.
NewsTrend status describes the development’s observed direction, not a forecast. Business implications are general operating ideas; actual results depend on your concept, market and economics.