1Q 2026 Cost Report: Non-building Work Leads Industry Starts Through First Quarter

BusinessFinance Economics 1Q 2026 Cost Report: Non-building Work Leads Industry Starts Through First Quarter By Alisa Zevin March 24, 2026 As the first quarter comes to a close, the construction industry continues to face challenges related to tariffs, labor shortages and other ongoing issues that will mitigate growth in the coming months. “Caution will continue to define the year ahead,” says Sarah Martin, associate director of forecasting at Dodge Construction Network. “Inflation pressures and worsening labor shortages are expected to persist, contributing to subdued growth in 2026.” Related link: ENR 2026 1Q Cost Report PDFSubscription Required While total starts rose 5% year-over-year in January, industry growth was confined to the non-building sector. “Construction activity began the year on a soft note, with multiple sectors experiencing notable year-to-date declines,” she says, noting that “activity is expected to stabilize over the course of 2026, albeit at relatively flat levels.” Steve Stouthamer, executive vice president of project planning at Skanska USA Building, shared that outlook. “The U.S. construction market is navigating a period of cautious transition, with modest overall growth expected amid high borrowing costs, materials inflation and persistent labor shortages,” he says. “While high-growth sectors such as data centers, semiconductors and life science projects continue to drive activity, traditional residential and commercial markets remain softer, h...