While spending on nonresidential construction picked up momentum toward the end of 2022, construction spending will moderate in 2023 and slow significantly in 2024, according to a new report from the American Institute of Architects (AIA).
Despite macroeconomic headwinds such as inflation, rising interest rates, and weak consumer sentiment scores, the AIA’s Consensus Construction Forecast panel—comprising leading economic forecasters—is projecting nonresidential construction spending to grow 5.8 percent in 2023 but slow to under 1 percent in 2024. Similar to 2022, growth in construction spending in 2023 will be uneven with a projected 2.6 percent increase in the commercial sector, 15.1 percent for industrial facilities, and 4.1 percent for institutional buildings. In 2024 spending on commercial buildings is forecast to decline 1.4 percent, while industrial projects gain a modest 0.4 percent, and a 3.8 percent increase for institutional facilities.
“The U.S. economy will continue to face serious challenges as we move through 2023, dampening the construction outlook,” says AIA Chief Economist Kermit Baker, Hon. AIA, PhD. “However healthy architect and contractor project backlogs should ease the negative impact of an economic slowdown.”
Complete details on the latest Consensus Construction Forecast can be found on AIA’s website.
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