North America, October 16, 2025
News Summary
The North American construction industry is experiencing a slowdown in growth rates, with the U.S. expected to see only 1% while Canada grows at 2.6%. This downturn is attributed to rising costs from tariffs, project cancellations, and proposed budget cuts in the U.S. The residential sector is hit hardest, as escalating expenses add roughly $10,900 to the cost of new homes. Meanwhile, Canada plans to ramp up homebuilding efforts significantly. The overall landscape reflects a challenging yet evolving environment for the construction sector in North America.
North American Construction Faces Slow Growth in 2025 Amid Tariffs and Supply Chain Disruptions
After achieving a record-breaking growth of 6.5% in 2024, the North American construction industry is now forecasted to experience a marked slowdown in 2025. The U.S. construction sector is projected to achieve a mere 1% real-term growth in 2025, while Canada is expected to grow by 2.6%, resulting in an average growth of 1.2% for North America as a whole.
A significant contributor to this slowdown is the residential construction sector, which comprised around 43.3% of U.S. construction in 2024. This sector is particularly vulnerable to tariff-driven cost pressures. The U.S. has imposed blanket tariffs ranging between 10-25% on all trading partners, with reciprocal tariffs that can reach up to 50% for countries lacking formal agreements. Notably, tariffs on steel and aluminum have doubled from 25% to 50%, leading to a material cost increase of 5.8-6.8%. This surge in costs has added approximately $10,900 to the price of an average new single-family home.
In May 2025, around 25% of members from the Associated Builders and Contractors (ABC) reported the cancellation or postponement of projects due to rising tariff-related costs. Additionally, proposed budget cuts in the U.S. federal budget threaten to slash funding for essential programs by $26.7 billion, further impacting housing affordability at a time when the average 30-year mortgage rate stands at 6.84%.
Looking ahead, new building permits in the U.S. are anticipated to decline by 3.2% year-on-year, while completions are projected to drop significantly by 12.3% in April 2025. In contrast, Canada is attempting to counteract this trend by aiming to double homebuilding to 500,000 units per year, a goal that is supported by CAD25 billion in debt financing and CAD1 billion in equity.
The situation is further complicated by the halting of funding from the Infrastructure Investment and Jobs Act (IIJA) and Inflation Reduction Act (IRA) in January 2025. This pause has disrupted U.S. infrastructure projects, with several grants worth a total of $1.7 billion being canceled.
Despite these challenges, growth opportunities do exist within the U.S. construction landscape. Sectors including technology infrastructure and energy are expected to witness significant investments, particularly in areas like artificial intelligence, data centers, and renewable energy projects.
Meanwhile, the construction outlook in Latin America is also mixed, with a projected 0.6% contraction in 2025. Notably, countries like Mexico are expected to see declines of 5.9%, while Brazil’s construction sector is forecasted to grow by 2.5% in real terms, thanks largely to a rise in construction employment. Furthermore, nations such as Peru and Ecuador anticipate growth of 3.8%, led by robust investments in infrastructure and energy projects.
The future of the construction sector in North America will depend heavily on maintaining policy stability regarding tariffs and trade negotiations to navigate this challenging environment. As the industry approaches 2025, all eyes will be on potential solutions and adaptations that will shape its path forward.
FAQs
What is the projected growth for the U.S. construction sector in 2025?
How much have tariffs affected the cost of new homes?
What is the expected decline in new building permits in the U.S.?
What is Canada’s goal for homebuilding in the coming years?
Key Features of the Article
| Feature | Details |
|---|---|
| 2024 Growth Rate | 6.5% |
| 2025 U.S. Growth Projection | 1% |
| 2025 Canada Growth Projection | 2.6% |
| Residential Sector Contribution in 2024 | 43.3% |
| Average Home Cost Increase Due to Tariffs | $10,900 |
| Total Proposed U.S. Budget Cuts | $26.7 billion |
| Expected Decline in Building Permits | 3.2% |
| Canada Homebuilding Target | 500,000 units per year |
Deeper Dive: News & Info About This Topic
Additional Resources
- Cranes Today: Regional Report – The Americas Construction Outlook
- Supply Chain Dive: Tariffs Leaving Contractors Guessing
- Vox: Tariffs and Housing Affordability Under Trump
- CemNet: US Construction Materials Prices Rising Due to Tariffs
- Construction Briefing: US Steel Tariffs Push Construction Prices Up
- Wikipedia: Construction
- Google Search: US Construction Industry
- Google Scholar: Construction Tariffs
- Encyclopedia Britannica: Construction
- Google News: US Construction Sector
Author: Construction CA News
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