Total non-residential construction spending increased 40.5% in the time between the start of the COVID-19 pandemic in February 2020 and July 2025, according to data released by the U.S. Census Bureau. As in previous quarters, manufacturing led spending in this time period, up 185.5%, but fell 6.6% between June 2024 and July 2025. Sewage and waste disposal and water supply sectors also remained high on the list, up 89% and 84.1%, respectively, since February 2020.

As of July 2025, year-over-year non-residential spending fell 1.1%. Commercial spending saw the largest drop at 82%, while religious spending had the highest increase, at 19.2%.

As manufacturing cools, data centers have continued to be a fast growing sector, somewhat offsetting the drop in the traditional office construction sector. Basu pointed to the results of recent ABC Backlog Indicator surveys. “Every month, about one in eight contractors indicates they’re working on a data center project. For that group, [the average backlog is 12 months]. For those contractors that are not working on a data center project, the average backlog is now at eight months and has been falling.”

Residential single-family construction is down, despite the large number of Millennial and Gen Z Americans reaching home-buying age. “Uncertainty, high cost of construction delivery [whether it’s in the form of higher material prices or construction workers] and [high interest] rates” all come into play, said Basu. Despite the expectation that federal interest rates will continue to be lowered, that doesn’t necessarily affect mortgage rates. “In fact, long-term interest rates are anchored by long-term inflation expectations. Those are actually rising because of tariffs, tax cuts and immigration policy.”