US construction starts surged 16%, with nonresidential construction seeing major gains
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Construction activity in the United States increased sharply in June 2025, with total construction starts rising 16 percent to a seasonally adjusted annual rate of $1.2 trillion, according to Dodge Construction Network. The gains were led by significant growth in commercial and infrastructure sectors, offsetting more moderate residential and institutional performance. The Dodge Momentum Index, a planning-based measure of future construction activity, also rose 6 percent, signaling sustained strength heading into the second half of the year.
This growth follows a relatively flat spring and marks a potential inflection point for the industry. As inflation slows and credit conditions stabilize, developers are showing renewed confidence in moving forward with large-scale projects. The June data suggest a stronger pipeline of work tied to manufacturing and high-tech sectors.
Commercial construction rebounds, led by mega-projects and data infrastructure demand
The commercial segment posted a 37 percent increase in June, driven by several multi-billion-dollar projects. These included Taiwan Semiconductor Manufacturing Co.’s $10 billion advanced chip plant in Phoenix and Eli Lilly’s new foundry in Indiana. These developments reflect growing investment in domestic production capacity and advanced technologies.
Data center construction also contributed to growth as cloud and artificial intelligence developers increased their capital spending. These facilities are essential to support rising digital workloads and national data resiliency. Recent legislation, including the CHIPS and Science Act, has created incentives that continue to support domestic industrial expansion.
Institutional and residential construction post moderate but steady gains
Institutional building starts rose 7 percent, supported by new school and healthcare facilities. Public school systems expanded in high-growth metro areas, and health networks launched new ambulatory care centers.
Residential construction increased 3 percent. Multifamily housing starts remained resilient, while single-family homebuilding saw modest growth in the South and West. Although mortgage rates remain elevated, favorable migration patterns and labor demand continue to support housing activity in those regions. Builders are cautious but remain active, particularly in markets where demand for rental units is high and construction costs are beginning to plateau.
Infrastructure investments continue to boost long-term activity
Infrastructure-related construction climbed 12 percent, reflecting the continued rollout of federally funded projects. New work on transportation networks, public works, and clean energy infrastructure added significantly to June’s total. Notably, large port and transit projects that had been in planning for over a year have now moved into the execution phase.
The nonbuilding segment, which includes civil engineering and energy projects, is expected to stay strong due to long-term commitments under the Bipartisan Infrastructure Law and Inflation Reduction Act. These efforts are especially important for heavy contractors, many of whom are now fully booked through the end of the year.
The Dodge Momentum Index rose 6 percent in June, underscoring continued strength in project planning. Historically, this index has been a reliable indicator of starts roughly one year out. Both institutional and commercial components of the index increased, a positive sign for the remainder of 2025 and into early 2026.
Challenges remain. Contractors continue to face skilled labor shortages, fluctuating materials pricing, and higher insurance premiums. However, the current trend points toward cautious optimism. If planning continues at this pace and macroeconomic conditions remain stable, the sector may achieve sustained growth across multiple segments, including tech infrastructure, clean energy, and essential public services.
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