US Construction Market Update: Fall 2026

Spending is up, but the growth is narrow

Census Bureau data for August 2026 showed total construction spending rising about 0.9% from July to a seasonally adjusted annual rate of roughly $2.2 trillion. Private nonresidential spending rose for the fifth month in a row, and 11 of 16 nonresidential categories moved higher.

The headline hides how concentrated the growth is. Data center spending alone was up more than 73% from a year earlier, and it has been growing at an annualized pace of about 149% since March. Earlier in the year, first-half spending had trailed 2025, with non-data-center commercial work softening.

Backlog is rising, mostly for the biggest firms

Associated Builders and Contractors reported its Construction Backlog Indicator at 8.7 months in September, up for a second straight month. Members with data center contracts averaged about three months more backlog than members without them.

That work sits mostly with the largest contractors. Commercial and institutional backlog did recover in September to its best level since July 2025, which is good news for the mid-size general contractors and trade contractors who build offices, schools, healthcare and multifamily projects.

Costs are squeezing margins

AGC reported that prices for inputs to new nonresidential construction were up 11.9% in September compared with a year earlier, the largest annual jump in four years. ABC's survey found sales and margin expectations slipping, with more than one in four contractors expecting margins to shrink over the next six months.

What this means when you bid

Rising costs and tighter margins make the estimate itself more important. A few practical steps:

• Re-price material on every bid instead of reusing unit costs from last quarter.
• Carry escalation on metals-heavy scopes with long lead times, such as steel, electrical gear, HVAC equipment and copper.
• Read the specifications closely. Margin is often lost on items that were in the spec book but not on the drawings.
• Bid the sectors that are recovering. Commercial and institutional backlog is improving even where data centers are not part of your work.