News Summary
The construction industry reported a notable downturn in overall activity, with a significant drop in nonresidential building projects. While residential starts slightly decreased, nonbuilding projects showed strong growth. Year-to-date figures indicate mixed trends across sectors, revealing a potential cooling in the market despite ongoing infrastructure investments. Analysts are closely monitoring developments for signs of recovery within the industry.
Construction Industry Experiences Significant Contraction in July 2025
New York City — The construction industry saw a notable decline in overall activity during July 2025, with the total value of construction starts dropping by 10.2% compared to the previous month, reaching a seasonally adjusted annual rate of $1.19 trillion. The sharpest decrease was observed in nonresidential building projects, which fell by 30.1% during the same period, signaling a potential cooling in this sector after prior growth.
Detailed Breakdown of Construction Starts
While nonresidential building starts experienced a significant decline, nonbuilding projects demonstrated robust growth, increasing by 20.4% in July. This positive trend contributed to the overall decrease in total construction starts but indicated resilience within certain segments of the construction market. Residential starts also dipped modestly by 3.1% month-over-month, suggesting a stabilization or slight slowdown in residential development activity.
From an annual perspective, the total construction starts for the first seven months of 2025 are up by 1.6% compared to the same period last year. Nonresidential construction has shown a stronger performance, rising by 4.3% year-to-date, whereas residential starts are down by 4.4%. Nonbuilding projects also posted a growth of 5.3% over the same period, underscoring a mixed but generally positive trend in the sector.
Yearly and 12-Month Trends
For the 12 months ending July 2025, total construction starts rose by 4.1% compared to the previous year. Breaking down by sectors, nonresidential starts increased by 4.6%, while residential starts experienced a slight decline of 0.7%. Nonbuilding projects, encompassing utilities and infrastructure, saw a substantial year-over-year increase of 9.3%, highlighting ongoing investment in public and large-scale infrastructure.
Key Movers in Nonbuilding and Nonresidential Construction
In July, nonbuilding construction starts at an annual rate of $395 billion. Noteworthy projects that commenced during this month include the Empire Wind Offshore Wind Energy Project in New York valued at $3.0 billion, the construction of the A’s Ballpark in Las Vegas at $1.8 billion, and the Boardman to Hemingway Power Transmission Line in Oregon costing $1.6 billion. These projects contributed to the month’s surge in nonbuilding activity, with utilities alone experiencing a month-over-month growth of 127.2%, along with a 50.0% increase in miscellaneous nonbuilding projects.
However, some infrastructure sectors experienced declines. Highway and bridge projects fell by 2.5%, and environmental public works decreased by 17.7%, reflecting shifts in project funding or project timing. Despite these setbacks, the sector remained generally positive regarding larger infrastructure investments.
Performance of Nonresidential Building Projects
Nonresidential building starts reached an annual rate of $443 billion in July, with notable decreases in some categories. Commercial projects declined by 8.5%, and office construction levels normalized to roughly the same levels as in 2024, with a month-over-month decrease of 33.1%. Institutional construction also declined by 4.6%, with education-related projects decreasing by 13.3%, and other institutional categories falling by 5.0%. Manufacturing projects experienced a dramatic drop of 84.7%, indicating a possible slowdown in industrial development.
Despite these monthly declines, the year-to-date figures show an increase in nonresidential starts, which are up 4.3% overall. For the last year, nonresidential construction activity increased by 4.6%, with sizable projects such as the UU West Valley Eccles Health Campus ($855 million), Mercy Hospital Campus in Missouri ($650 million), and Meta Data Center Campus in Ohio ($550 million) advancing in July.
Residential Construction Moves Slightly Down
The residential sector saw decreases in July, with starts falling to an annual rate of $356 billion. Single-family homes experienced a minor increase of 1.2%, whereas multifamily projects decreased by 9.5%. For the year so far, residential starts are down 4.4%, with single-family decreases of 10.1% balanced somewhat by an 8.3% rise in multifamily development. Over the 12 months ending July 2025, residential starts declined by 0.7% from the previous year.
Among the year’s largest multifamily projects that began in July were the Rangel Houses Remodeling in New York valued at $552 million and the 20 Long Slip Apartment Tower with a $365 million price tag in Jersey City, New Jersey.
Regional Variances and Broader Outlook
Geographically, regional starts were mixed in July, with increases in the Northeast and declines in the Midwest, West, South Central, and South Atlantic regions. This geographic variation reflects differing local economic conditions and project pipelines across the country.
Overall, the construction sector in July 2025 experienced a slowdown compared to June, primarily driven by a steep decline in nonresidential building starts. Conversely, growth in nonbuilding and nonresidential sectors provided some counterbalance, maintaining a generally positive outlook for the year’s remaining months.
As market dynamics continue to evolve, industry analysts will be watching for signs of recovery or further slowdown in specific sectors, especially given ongoing infrastructure investments and fluctuations in residential development activity.
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Additional Resources
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- Wikipedia: Construction
- Construction on Historic Redevelopment of Mary Ellen McCormack Housing Complex
- Google Search: Mary Ellen McCormack Housing Complex
- AHSC Starts Construction on Boston Affordable Project
- Google Scholar: Boston Affordable Construction
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- Encyclopedia Britannica: Towing
- Construction Begins on Turning Empty Office Space into Residential Units
- Google News: Office Space to Residential Construction
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