Higher Costs, Fewer Deals Ahead for Construction
Date Posted: October 16, 2025
Posted In: Discussion,
From Construction Dive: Rising costs and slowing deal flow are pressuring contractors’ pipelines, said Anirban Basu, chief economist at Associated Builders and Contractors, during an Oct. 8 webinar on construction’s outlook.
Firms active in data center work report about 12 months of backlog, but high input and labor costs are putting a dent in contractors’ books across other categories, according to ABC’s latest survey.
If borrowing costs fall and federal infrastructure spending is renewed, Basu expects starts to pick back up, but not until late 2026 or 2027.
Dive Insight:
The latest ABC economic forecast signals a more challenging stretch ahead for construction leaders. Along with materials and labor costs, tightening financing conditions could limit project profitability and delay new groundbreakings into next year, according to ABC.
“This is the key issue I think for many contractors going forward: interest rates,” said Basu. “One of the things I hear from contractors is, at least some contractors not working on data center projects, deal flow is drying up.”