Construction Market Overview

Global Construction Market was valued at ~$16 trillion in 2023, and it is expected to reach a total value of ~$25 trillion by 2030, growing at a compound annual growth rate (CAGR) of ~6.3%, driven by factors such as rapid urbanization, population growth, infrastructure development, technological advancements, and increasing investments in sustainable and green construction projects.

Key drivers of this growth include:

1. Urbanization & Population Growth – Rising urban populations, especially in emerging economies like China, India, and Southeast Asia, are fueling demand for residential and commercial construction.

2. Government Infrastructure Investments – Large-scale infrastructure projects, including transportation networks, smart cities, and renewable energy facilities, are accelerating growth in both developed and developing regions.

3. Technological Advancements – Adoption of Building Information Modeling (BIM), modular construction, 3D printing, and automation is improving efficiency, reducing costs, and enhancing sustainability in construction.

4. Sustainability & Green Building Initiatives – Growing emphasis on energy efficiency, carbon-neutral buildings, and eco-friendly materials is driving innovation and investment in sustainable construction practices.

5. Rising Private and Public Sector Investments – Increased government spending on infrastructure and private sector investments in commercial real estate, industrial facilities, and mixed-use developments are supporting market expansion.

6. Growth in Emerging Markets – Rapid development in Asia-Pacific, the Middle East, and Africa is contributing significantly to market growth, with countries investing in smart cities, housing, and mega infrastructure projects.

7. Post-Pandemic Recovery & Resilience – The construction industry is rebounding from supply chain disruptions and labor shortages, with increasing focus on resilient supply chains, digital transformation, and risk management.

The market is expected to witness significant opportunities in sectors such as residential, commercial, industrial, infrastructure, and energy & utilities, with Asia-Pacific leading the growth, followed by North America and Europe. Emerging trends such as prefabrication, AI-driven project management, and smart building technologies will further shape the future of the construction industry.

US Construction Market Deep Dive

Market Overview

The United States holds approximately 10% of the global construction market share, with an estimated market value of ~$1.84 trillion in 2024. The U.S. construction sector is projected to grow at a compound annual growth rate (CAGR) of ~5.2%, reaching an estimated $2.5 trillion by 2030.

Key Drivers Fueling Growth in the U.S. Construction Market

1. Infrastructure Modernization & Government Investments – Federal and state-level infrastructure initiatives, including the Bipartisan Infrastructure Law (BIL), are driving massive investments in roads, bridges, public transit, airports, and utilities.

2. Housing Demand & Urban Expansion – Population growth, increased housing affordability initiatives, and a rising demand for single-family and multifamily housing continue to propel the residential construction sector.

3. Technological Innovations & Smart Construction – Adoption of AI, robotics, modular construction, and digital twin technology is enhancing efficiency, reducing costs, and improving project management.

4. Sustainability & Green Building Initiatives – Growing emphasis on LEED-certified buildings, energy-efficient materials, and net-zero carbon construction is reshaping commercial and residential real estate development.

5. Manufacturing & Industrial Growth – The rise of onshoring and reshoring efforts, spurred by supply chain disruptions and government incentives, is leading to increased construction of manufacturing plants, warehouses, and logistics centers.

6. Expansion of Commercial & Mixed-Use Developments – The demand for office spaces, retail centers, hospitality projects, and entertainment hubs remains strong, particularly in high-growth urban areas.

7. Disaster Resilience & Climate Adaptation Projects – Increased investment in resilient infrastructure, flood control systems, and wildfire-resistant construction is becoming a priority to mitigate climate-related risks.

8. Public-Private Partnerships (PPPs) – Collaboration between governments and private sector entities is driving large-scale construction projects, particularly in transportation, healthcare, and energy sectors.

The U.S. construction market remains one of the most dynamic and diverse in the world, with residential, commercial, industrial, and infrastructure projects playing a crucial role in economic growth. Looking ahead, sustainability, digital transformation, and labor force modernization will be key factors shaping the industry's future.

US Construction Spending

The latest data on U.S. residential and commercial construction spending highlights significant market trends over the past two decades. Residential construction expenditures saw a dramatic decline following the 2008 financial crisis, bottoming out around 2011 before embarking on a steady recovery. This growth accelerated sharply post-2020, peaking in 2022, likely driven by favorable interest rates, strong housing demand, and economic stimulus measures. However, recent data suggests a plateau, signaling potential market stabilization or a cooling-off period.

In contrast, commercial construction spending has remained relatively flat over the same period, with minor fluctuations but no substantial long-term growth. This stagnation may be attributed to structural shifts in the commercial real estate market, including the rise of remote work, declining demand for office space, and changing consumer behaviors impacting retail construction.

Moving forward, residential construction trends will likely be influenced by evolving mortgage rates, affordability constraints, and macroeconomic conditions, while commercial construction may continue to face headwinds due to shifting work and shopping patterns. Investors and industry stakeholders should closely monitor policy changes, interest rate movements, and broader economic indicators to anticipate future construction spending trends.

US Construction Sector as % of GDP

The construction sector has steadily increased its contribution to U.S. GDP, rising from around 3.4% in mid-2012 to approximately 4.4% in early 2024. This growth indicates that construction has expanded at a faster rate than the overall economy, strengthening its position within the broader economic landscape.

Since GDP itself has also grown during this period, the rising percentage share suggests that construction has outpaced many other sectors. Factors such as strong residential demand, increased infrastructure investments, and post-pandemic economic shifts have likely driven this trend. The peaks and fluctuations around 2021 may reflect stimulus-driven activity and subsequent market adjustments.

With construction continuing to outperform broader economic growth, industry participants should watch key factors like labor availability, material costs, and interest rate trends, which could impact future expansion. The sector's sustained momentum highlights its growing influence in the economy and investment opportunities moving forward.

US Construction Sector`s Employment

U.S. construction employment has shown a long-term upward trajectory, with notable periods of expansion and contraction. Employment levels peaked before the 2008 financial crisis, followed by a sharp decline as the construction sector contracted. The recovery began around 2012, with steady job growth until another sharp drop in early 2020, coinciding with the pandemic-driven economic shutdown. However, employment rebounded quickly, surpassing pre-pandemic levels and continuing its upward trend.

The overall trend suggests strong demand for labor in the construction industry, supported by increased residential and infrastructure activity. However, ongoing labor shortages, wage pressures, and economic uncertainties may present challenges in sustaining this momentum. Employers and policymakers will need to focus on workforce development and training to meet the growing demand for skilled construction labor.

US Construction Forecast

According to S&P Global, the U.S. construction sector is poised for continued expansion, supported by strong demand for civil engineering and infrastructure projects. Aging infrastructure and historically high levels of government spending are key drivers, particularly in transportation, utilities, and public works. Investments in energy transition, sustainability, and climate resilience are also expected to fuel growth across multiple end markets, with power infrastructure standing out as a major beneficiary.

The rising adoption of AI and increasing connectivity needs further reinforce long-term demand for telecommunications networks and data centers, ensuring steady activity in the technology and communications sectors. Additionally, federal incentives from the Infrastructure Investment and Jobs Act (IIJA), the CHIPS Act, and the Inflation Reduction Act (IRA) will provide an extra boost in the latter half of 2024 and beyond, stimulating both public and private construction projects.

The recent reshoring and nearshoring trend has driven a surge in engineering and construction (E&C) activity for manufacturing facilities, particularly in semiconductors and electric vehicle (EV) battery plants. However, this momentum is expected to moderate by 2025 as initial investment waves stabilize. Despite potential slowdowns in certain areas, the overall construction outlook remains positive, with infrastructure, technology, and energy projects leading growth.

US Nonresidential Construction Spending: Sector Breakdown

Nonresidential construction spending in the U.S. continues to be dominated by the manufacturing sector, which reached $237 billion in December 2024, reflecting a 11.4% year-over-year increase. This sustained growth highlights strong investments in industrial and high-tech facilities, particularly in semiconductors and electric vehicle (EV) production.

Other major spending sectors include power ($149.5B, +3.4%), highways & streets ($144.3B, -5.1%), and educational construction ($134.7B, +4.5%). While power infrastructure investment remains steady, highway and street construction experienced a decline, possibly due to delayed public sector projects or shifting budget priorities.

Sectors with the highest annual growth include water supply (+12.9%) and sewage & waste (+10.4%), suggesting increasing investments in sustainability, resilience, and infrastructure modernization. Amusement & recreation (+8.8%) also saw significant growth, reflecting expanding demand for entertainment and leisure facilities.

Conversely, commercial construction declined (-6.0%), and office construction saw only moderate growth (+3.6%), likely due to shifting workplace trends and the impact of remote work. Lodging (-4.4%) and religious (-4.6%) construction spending continued to decline, consistent with long-term trends in these segments.

Overall, nonresidential construction remains robust, driven by manufacturing, infrastructure resilience, and sustainability initiatives. However, certain traditional commercial and office segments face ongoing headwinds.

US Private Equity Activity in Construction & Engineering

Private equity (PE) deal activity in the construction and engineering sector peaked in 2021 with 266 deals and a record-high deal value exceeding $20B. Deal volume remained strong in 2022 and 2023, though values showed some volatility.

However, 2024 shows a sharp decline in both deal count (140 deals) and total deal value, reflecting tighter financial conditions, rising interest rates, and cautious investor sentiment. Despite this pullback, infrastructure demand and government incentives could drive renewed activity in the coming years.

Private equity infrastructure dry powder surged from $40B in 2013 to a peak of nearly $160B in 2021, reflecting strong capital inflows and investor appetite for infrastructure projects. However, since 2022, dry powder has declined, falling to around $120B in 2023, indicating a shift toward deployment amid rising project opportunities.

This trend suggests that firms are actively investing in infrastructure, driven by government incentives, energy transition projects, and digital infrastructure needs. The decrease in reserves may also reflect higher financing costs and a more selective investment environment.

Conclusion: Construction & Private Equity – A Resilient and Evolving Partnership

For private equity sponsors, the construction sector presents a compelling long-term investment opportunity, driven by infrastructure modernization, technological advancements, and sustainability initiatives. The U.S. construction industry continues to expand, outpacing GDP growth and demonstrating resilience despite economic fluctuations. Government incentives, including the Infrastructure Investment and Jobs Act (IIJA), CHIPS Act, and Inflation Reduction Act (IRA), provide strong tailwinds for infrastructure, manufacturing, and energy-related projects, creating attractive avenues for capital deployment.

Manufacturing construction has emerged as a dominant force, with significant growth in semiconductor, EV battery, and logistics facility development. This sector's sustained momentum aligns with reshoring trends and federal policies aimed at strengthening domestic supply chains. Additionally, infrastructure spending in power, water supply, and transportation is accelerating, reinforcing demand for engineering and construction (E&C) services.

Private equity deal activity in construction and engineering surged to record levels in 2021 and remained robust in 2022-2023. However, 2024 has seen a decline in both deal count and deal value, reflecting higher interest rates, cautious investor sentiment, and increased selectivity in capital deployment. Despite this slowdown, infrastructure-focused PE funds hold significant dry powder, indicating continued appetite for high-quality, long-term investment opportunities.

Looking ahead, the intersection of digital transformation, AI-driven project management, and modular construction offers efficiency gains and cost advantages that could reshape the sector. However, sponsors should remain mindful of labor shortages, material cost volatility, and evolving regulatory frameworks. While certain segments, such as commercial real estate and office construction, face ongoing headwinds, infrastructure, industrial, and energy-related projects provide a strong foundation for sustained investment.

The construction industry’s steady growth, coupled with PE’s role in funding critical infrastructure and technological advancements, underscores the sector’s appeal for long-term capital deployment. As the market evolves, disciplined investment strategies, targeted sector selection, and proactive risk management will be key to maximizing returns in an increasingly complex construction landscape.

Sources & References

Aecom. (n/d). Global construction prospects 2024. https://publications.aecom.com/MEH/report/global-construction-prospects-2024 

American Investment Council. (2024). Building America’s Infrastructure: How Private Equity Improves Local Communities. https://www.investmentcouncil.org/wp-content/uploads/2024/12/2024-AIC-Infrastructure-Report.pdf 

Construction Coverage. (2025). US Construction Industry Facts, Stats & Trends. https://constructioncoverage.com/data/us-construction-spending#:~:text=U.S.%20Construction%20Industry%20Facts%2C%20Stats%20&%20Trends,-Jonathan%20Jones&text=Below%20are%20several%20key%20statistics,employment:%208.0%20million%20(2023) 

NMSC. (2025). U.S. Construction Market. https://www.nextmsc.com/report/us-construction-market 

Statista. (2025). Construction industry in the U.S. - statistics & facts. https://www.statista.com/topics/974/construction/#topicOverview 

S&P Global. (2024). Global Engineering and Construction. https://www.spglobal.com/_assets/documents/ratings/research/101601659.pdf 

Upmetrics. (2024). Construction Industry Statistics. https://upmetrics.co/blog/construction-industry-statistics 

U.S. Bureau of Labor Statistics, All Employees, Construction [USCONS], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/USCONS, February 17, 2025.

U.S. Census Bureau, Total Construction Spending: Commercial in the United States [TLCOMCONS], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/TLCOMCONS, February 17, 2025.

U.S. Census Bureau, Total Construction Spending: Residential in the United States [TLRESCONS], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/TLRESCONS, February 17, 2025.

U.S. Census Bureau, Total Construction Spending: Total Construction in the United States [TTLCONS], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/TTLCONS, February 17, 2025.