KEY POINTS
-
Southern construction is forecasted to stay stable in 2025, slightly declining by just 0.3%, outperforming the national 2.2% contraction.
-
Commercial construction leads growth in the South, rising 8.3% in 2025, driven by Transportation Terminals, Offices, and Data Centers.
-
Multi-Family and Community construction rebound, while Education, Industrial, and Medical segments are projected to decline across the South.
Construction in the American South is forecasted to plateau in 2025, with total nonresidential spending expected to reach $301.7 billion, a slight decline of 0.3% from 2024 levels. This relative stability outperforms ConstructConnect’s national forecast of a 2.2% contraction, positioning the South as a resilient market in an uncertain economic environment.
Commercial Construction is the South’s Best Performing Category
Commercial construction emerges as the standout performer in the South, projected to rise by 8.3% to $82 billion in 2025. This growth beats out the 7.4% rise ConstructConnect projects for the entire US.
Both in the South and nationwide, 2025 Commercial activity is largely expected to come from the subcategories of Transportation Terminals and Offices. It needs to be pointed out, however, that data centers, which are magnets for multi-billion-dollar megaprojects, are currently included in the Office category.
No matter the nuances of what’s included in what category, the South’s gains in these two areas are expected to offset its losses in other kinds of commercial construction.
Multi-Family Rebounds in the South, and Community Construction Rises, too
Multi-Family Residential construction shows signs of recovery in the South, projected to grow 4.6% in 2025 after a steep 23.7% decline in 2024. The expected gains would bring Multi-Family Residential construction spending to to $41.5 billion.
The success here contradicts the national construction forecast of a 3.9% drop, suggesting the South is leading what ConstructConnect Chief Economist Michael Guckes calls a potential return to growth after two years of sharp declines in the Multi-Family sector.
Community construction spending is also up in the South, with expected growth this year of 3.7%.
Like the Rest of the Nation, Educational Construction Spending Falls in the South
Educational construction in the South is projected to fall 12.3% in 2025. That would bring spending from $50.6 billion to $44.4 billion. The drop here is close to ConstructConnect’s national forecast of a 10.5% decline in Education construction, possibly reflecting broader government spending constraints.
Drop in South’s Industrial Construction Spending Expected
Industrial construction continues its multi-year adjustment, with an expected 5% drop in the South for 2025. This decline is less severe than the national Manufacturing forecast of a 9.3% decrease, indicating the South’s industrial sector may be weathering the correction better than other regions.
South’s Medical Construction Spending Exceeds National Declines
Medical construction in the South is expected to undergo a significant correction following rapid growth in 2024. Forecasted spending of $16.4 billion represents a 24.1% decrease from the previous year’s total of $21.6 billion. This exceeds ConstructConnect’s national total Medical forecast for an 18.6% decline this year.
Not a Surprise: Civil construction Spending Stays Put in the South
Finally, Civil construction (roads, bridges, and power infrastructure) spending remains nearly the same in the South this year. The category is projected to reach $116.9 billion in 2025, just shy of a 1% increase from 2024’s numbers. The South’s performance here aligns with ConstructConnect’s assessment that nationwide Civil construction is set for stagnation in 2025 after strong growth in recent years. Up to now, Civil construction spending has played a critical role in the construction’s growth, offsetting the declines in other major segments.
Overall Q2 2025 Outlook for the South
Overall, the South’s construction market in 2025 is showing resiliency amid an uncertain national landscape. While the South’s Educational and Industrial construction spending is set to drop, ConstructConnect projects similar outcomes across the US.
What’s more, the South’s strength in Commercial and Multi-Family Residential construction and its steady Civil spending shows it is able to outpace national trends. This stability helps position the South as a strong performer in an evolving economic environment.
