Economists Track South Region’s Growing Role in Net Construction
08. 13. 26
Publication: Concrete Products
Date: August 11, 2026
In its latest U.S. Construction Industry Outlook report, Ducker Carlisle measures current activity and near-term prospects in the principal areas of Residential, Nonresidential, and Nonbuilding. Members of the firm’s construction practice examine such developments as:
Construction price stability in the wake of recent years’ increases, improving future project economics.
Strong infrastructure project spend and backlog, with future growth in energy and water treatment work.
How Federal Reserve interest rate cuts would stimulate sentiment and momentum in housing.
The shift from climate and ESG guidelines to resilient building materials and performance.
Real estate investors’ realization of profitable growth and expansion opportunities in Tier 2 and Tier 3 metropolitan statistical areas.
How panelized building methods and off-site component production are helping offset challenges tied to construction labor shortages.
AI technology used to improve construction specification, bidding, and quoting.
Consolidation and productivity enhancements across distribution, underscored by recent Home Depot and QXO moves.
Residential Market
While new single-family project backlogs have mostly cleared, Ducker Carlisle notes, builders are pessimistic about the pressures they face while waiting for anticipated mortgage rate relief. The backlog factor places builders under pressure to create greater incentives to sell existing inventory and adapt their ongoing builds to buyer affordability and preferences. Single-family activity will remain flat unless affordability can be addressed by interest rate cuts or other solutions from the industry. Nevertheless, a long-term housing gap remains, with a deficit of five million-plus completed housing units compared to new households formed since 2010.
Multi-family project activity has cooled to below pre-pandemic levels after approaching a 50-year peak in 2022. The sector is now hampered by increasing costs associated with acquisition, development, and construction loans, spurring sharp declines in 2023 and 2024. With construction costs and interest rates still high, multi-family project starts are likely to remain off during the 2024 to 2026 window.
Southern Strengths
As total industry activity has softened in 2026, Ducker Carlisle construction market observers point to Southern regions, which have continued to outperform the rest of the U.S. and will represent nearly half of industry spending by 2029. At present levels, the region accounts for a combined $957 billion or nearly 45 percent of the national construction tally across residential, nonresidential, and nonbuilding projects.
Although overall growth has slowed, the South remains among the industry’s healthiest regions, driven by long-term trends related to net inbound migration, lower-cost housing markets, and post-disaster rebuild and resilience-building. Regions with robust economic growth often see more construction activity due to increased investments in both residential and commercial properties; consider the impact of growing tech industries or significant manufacturing expansion on states like Texas, Georgia, Arizona, Utah, the Carolinas, and Colorado.
Nonresidential Segment
Data centers, health care, and leisure-related sectors will grow fastest in an otherwise mixed nonresidential construction landscape, Ducker Carlisle contends. The manufacturing segment will continue to contract through this year due to a combination of unwinding from 2022 to 2023 peaks related to growth in the computer, electronics, and electrical sub-segments, and from uncertainties related to unclear tariff and trade policy effects on global supply chains.
The office segment will be driven more by data center construction than by pure-play office builds; however, this growth will be concentrated in fewer geographic or regional markets.
Lodging and amusement or recreation sectors will display strength near term as travel growth and hotel occupancy rates rebound to or eclipse pre-pandemic levels. The commercial segment remains a weak point, sustaining a long-term trend of building inventory reorganization or repurposing.
Forecast Scenarios
Taking stock of market drivers for the remainder of the decade, Ducker Carlisle finds all scenarios showing an overall increase in construction expenditures, with:
Residential construction strengthened based on expected interest rate reductions by the Federal Reserve, leading to segment activity rebounding beyond 2025 with future annual growth between seven percent and nine percent.
Nonresidential building spending will moderate after a strong surge in 2023 to 2024.
Nonbuilding work will see continued growth rooted in funding from the Infrastructure Investment and Jobs Act and successor legislation.
This article was first published in Concrete Products.