Construction spending rose slightly from November to December thanks to growing demand for single-family houses and data centers, according to a recent analysis of a new government report by the Associated General Contractors of America.
Association officials noted, however, that tariffs could impact future construction spending.
“Despite declines in a few segments, construction demand remains relatively strong,” AGC CEO Jeffrey Shoaf said in a news release. “But increasing the cost of a range of construction materials will prompt contractors to raise bid prices, potentially undermining future demand for projects.”
Spending totaled $2.19 trillion at a seasonally adjusted annual rate in December. The figure inched up 0.5% from the upwardly revised November rate and 4.3% above the December 2023 level.
Private residential spending rose 1.5% for the month and rose 6.0% from December 2023, AGC reported. Single-family homebuilding rose 1.0% from November but slipped 0.8% year-over-year. Spending by homeowners on additions and renovations rose 2.6% for the month and 21.9% year-over-year. But multifamily construction fell 0.3% in December and 10.5% from a year earlier.
Private nonresidential spending was up 0.1% from November and up 2.3% year-over-year. Spending on data centers, which the Census Bureau includes in office construction, jumped 0.9% for the month and 44.5% from a year earlier. Private office construction other than data centers grew 1.2% in December and 12.8% year-over-year.
Public construction spending fell 0.5% for the month and rose 4.3% over 12 months. Among the three largest segments, highway and street construction rose 0.7% in December but fell 5.0% year-over-year, education construction fell 0.6% for the month but rose 5.8% year-over-year, and transportation spending declined 1.3% in December but increased 3.0% from a year earlier.
Association officials noted that the recently released AGC of America/Sage 2025 Construction Hiring & Business Outlook revealed that potential tariffs and their impacts on materials prices were among firms’ top four concerns in 2025. Any tariffs that are ultimately put in place with trading partners, including Mexico and Canada, are likely to increase the costs of construction and harm construction employers who are forced to absorb cost increases because they are locked in contracts, sometimes that were signed several years ago.
“We are working with the Trump administration to explain the negative impacts of inflation has had on our industry, particularly these few years,” Shoaf said. “Hopefully the administration will be able to rapidly resolve the underlying concerns driving the new tariffs so our members can help build an even stronger economy.”