As we head toward 2026, it becomes important to consider construction market conditions to best determine how to leverage digital transformation and other emerging technologies like AI (artificial intelligence) and other emerging technologies that might burst on our radar in the days ahead. Thus, let’s take a few minutes to look at the state of the market to best prepare for what comes next.
In October, ABC’s (Associated Builders and Contractors) Construction Backlog Indicator fell to 8.4 months. The reading is down 0.1 months since September 2025, but unchanged from October 2024. Interestingly, the report suggests roughly 65% of contractors indicate they think the U.S. construction industry is contracting and 23% expect their sales to decline in the next six months.
As a construction company you must be looking at what this actually means for the short-term and long-term. Because for us who have covered this sector, a contracting construction market means fewer projects are being started, less investment in the big projects, and even slower growth in residential and other commercial projects that are the lifeblood of the industry. Again, these contractions are very cyclical in the construction industry. Some companies can weather what the economic downturn signal. While others simply are unable to withstand these downturns.
However, before you push the panic button, there is a silver lining to all of this: data-center construction projects. Roughly one in seven contractors are under contract to work on data centers. They still must move forward.
This sentiment is echoed in JLL’s 2026 U.S. Construction Perspective. Despite overall construction spending declining 4.7% in 2025 in real value, data centers, utilities, and infrastructure demonstrated remarkable resilience and growth.
What’s Next in 2026
With all this in mind for 2025, what’s ahead for 2026? JLL points to a few key points to consider for a 2026 strategic framework.
First, trade and labor costs will impact the market. Although local impacts will not be uniform, the net impact and critical interactions will be better defined. Second, some regions will continue to see a robust labor market while others will need to address accelerating constraints. Third, success in 2026 will be about big-picture approaches that recognize the nuanced interactions happening at a local level.
Next Steps for Your Construction Business
As we look ahead to 2026, construction businesses that embrace digital transformation will be better positioned to navigate market fluctuations and labor challenges. But this isn’t just about adopting flashy new technologies—it’s about creating an ecosystem where data, collaboration, and predictive insights drive smarter decisions. I am certain you have heard some of this before. But as we have also talked about, as the market slows and you can take a deep breath you can also look inwardly at how to invest and to improve.
How can we enable all of this? Here are a few key steps to consider:
- Leverage AI (artificial intelligence) and predictive analytics or be left behind. This technology is no longer a nice-to-have; it is a must-have.
- Integrate the IoT (Internet of Things) into the jobsite where applicable, as it can help with quality, safety, and productivity.
- Focus on workforce development. We must invest in reskilling, upskilling, and preparing the workforce of tomorrow to leverage emerging technologies.
Digital transformation will be key for businesses to succeed in the years ahead. Construction companies must embrace AI, the IoT, and other emerging technologies to shape the future of construction. I am
confident when you look to diversify your partner pool to collaborate and invest in the right efficiency and tech tools, the sky is the limit to future success, all while being resilient. And who knows, you just might capture some new customers and boost margins along the way.
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