Construction Industry: Changes, Challenges, and Chances

Apr 6, 2022

The construction sector in the United States is expected to grow by 8.8 % this year, and by 2026, the country’s construction production is predicted to exceed $1.65 Trillion. Construction firms should be ready to tackle the challenges and changes to take advantage of the opportunities in this sector.

The industry has experienced a decline in recent years despite being a key sector for economic growth in the United States. This sector is expected to re-emerge and grow in 2022 after a challenging period of modifying estimates and changing expectations. The residential construction sector will continue to grow in the coming quarters, followed by non-building construction and commercial construction. Despite the inevitable challenges that the construction industry faces, this sector will experience changes that will aid in the mitigation of some of the issues. This blog explains the recent trends in the construction industry and how these trends will shape the future of the construction industry.

Construction Industry Forecast

In 2022, the construction sector in the United States is expected to grow by 8.8 %, reaching $1.35 Trillion. The growth trend is likely to continue with a Compound Annual Growth Rate (CAGR) of 5% between 2022 and 2026. By 2026, the country’s construction production is predicted to exceed $1.65 Trillion.

Infrastructure expectations have increased with the passage of the Bipartisan Law, which includes long-term expenditures to rebuild roads, bridges, and highways, modernize transportation, and expand energy output. The non-residential building and non-residential construction are predicted to lead the development, followed by transportation and public safety.

Analyzing the Construction Industry from a Sectoral Perspective

  • Residential Construction: A key contributor to the economic recovery in the US following the Coronavirus (COVID-19) crisis has been the housing sector, with double-digit growth rates since the third quarter of 2020. Due to low mortgage rates, strong demand for bigger living spaces, and a shallow housing inventory, this sector has experienced rapid growth. With Fed’s recent signals about continued interest rate increases to tame inflation, this sector may slow down in the near term.
  • Commercial Construction: Retail stores, warehouses, offices, and hotels are some examples of commercial buildings. In 2022, commercial construction is predicted to increase by 12%, with warehouse construction accounting for most of the increase. The need for warehouse construction expanded as the reliance on e-commerce grew during the pandemic.
  • Institutional Building: If the COVID-19 vaccination rate continues to rise and the variants do not lead to widespread closures, institutional building starts will slowly increase in 2022. Starts will gain 6% as dollar value increases to $145B. It includes construction activity in Education, Transportation, Recreation, Healthcare, and Public buildings.
  • Manufacturing Construction: Due to the significant limits and delays induced by the pandemic in manufacturing and distribution networks in 2020, the construction sector in the United States is likely to suffer a short setback in 2022. As a result, manufacturing construction starts are predicted to remain constant in dollar value in 2022, at $22.6B.
  • Non-Building Construction: This sector will have great potential due to the Infrastructure Investment and Jobs Act (IIJA). However, as the bill was passed in 2021, minor effects are projected in 2022. Street and Bridge Construction, Water and Environmental Engineering, Electric Power and Utilities, and other Non-Building structures are all included in this category. By 2022, Power/Utility construction will increase by 10% to $38.5B, while public works construction will increase by 5% to $167B.

Challenges in the Construction Industry

  • Construction is slow to adopt new advancements and technologies, such as project management software, drones, and building information modeling.
  • A shortage of skilled labor has slowed the pace of onsite projects and makes it more difficult to encourage new talent to become involved. Over the next two years, one million new construction workers will be needed in the United States.
  • In the construction industry, supply chain disruptions often lead to a shortage of building materials and increased prices. According to a National Association of Home Builders survey, more than 90% of builders reported shortages of appliances, framing lumber, and oriented strand boards. The Bureau of Labor Statistics estimated that construction material prices were up by almost 25% in 2021.

The Construction Sector is Expected to Change in 2022

The construction industry is changing norms regarding protective gear. Innovations with wearable technology are making their ways to the market, such as boots with Wi-Fi connections that can detect a person’s fall and headsets that reduce noise while keeping workers focused.

  • As the construction industry grows, green construction is making its mark. It includes technology that can lower a building’s carbon footprint and construction models that help in reducing the usage of resources. Green Scaping has become common in urban centers where rooftops are covered with plants and small parks.
  • Construction firms are increasingly turning to modular and offsite construction to overcome time and onsite constraints. By 2025, the modular construction industry will reach almost $110B in value, dominated by the residential sector.
  • Construction technology innovations boosting efficiency will likely stand out as the biggest differentiator for builders and developers this year. Innovations that enable this sector include Construction Drones, Augmented Reality (AR), and Building Information Modeling (BIM) to facilitate computer renderings of buildings and utilities. Employing mobile applications for real-time inspections will make the construction process more efficient.
  • A change in attitude toward trade schools allows fresh talent to be employed and attracts Generation-Z to the construction business. Women are also stepping up to fill roles in the construction business; according to the Bureau of Labor Statistics, women already hold 10.9% of construction industry employment, a number predicted to climb.


Despite certain obstacles, the construction industry is the largest contributor to the US economy. Construction firms should take necessary steps to address the challenges like labor shortages, technology adoption, and productivity issues to avoid escalation of costs, diminishing productivity, and project delays. Companies require professionals equipped with the latest skills to operate in the construction domain. iQuasar, with over 15+ years of experience, has a vast pool of qualified candidates and strong industry connections that can help businesses in the construction industry with skilled professionals in quick turn-around time.

Also Read: Bipartisan Law – Challenges and Opportunities in Civil Engineering

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