The only clear-cut thing about the 2026 construction forecast’s crystal ball is that it’s not crystal clear.
Most economists remain optimistic that the new year will continue the success seen in 2025 when it comes to federal funding for heavy/highway and infrastructure construction – at least until the latter part of the year. However, other forecasters raise concerns about obstacles facing the industry.
With the current federal transportation funding bill – the five-year, $1.2-trillion Infrastructure Investment Jobs Act (IIJA) – set to end September 30, the first three quarters of the year should remain well funded. The Federal Highway Administration’s budget request for Fiscal Year 2026 is $72.6 billion.
In the American Road & Transportation Builders Association’s (ARTBA) 2026 Construction Market Forecast, Chief Economist Alison Premo-Black wrote: “As expected, highway construction market activity will plateau at or near record levels in the last year of the federal surface transportation law.”
A panel of industry leaders in Construction Dive’s “5 Construction Trends to Watch in 2026” agrees, as the article states: “Funding that is already locked in, coupled with a strong pipeline of projects, should prop up infrastructure construction activity, though the outlook grows more complex as the year unfolds …”
ARTBA’s Premo-Black looked at this year’s “Market Outlook by Mode” and sees increased projections over 2025 in five areas: Public Highway & Street Construction, Bridge & Tunnel Work, Public Transit & Rail Construction, Airport Terminal & Runway Work and Port & Waterway Construction. She predicts Public Highway/Street Construction and Bridge/Tunnel Work providing an estimated $145.5 billion of work this year – up 3% ($1.8 billion) compared to 2025. Although Public Highway/Street and Bridge/Tunnel construction makes up nearly 70% of the predicted transportation funding this year, there will be a more than 20% combined increase over 2025 in the dollar amount of forecasted construction in the Public Transit/Rail, Airport Terminal/Runaway and Port/Waterway sectors. Construction in the Public Transit/Rail is predicted to be more than 12% higher than last year.
Associated General Contractors of America (AGC) CEO Jeffrey Shoaf also believes federal funding won’t be an issue in 2026, saying, “With supportive infrastructure funding, workforce, trade and permitting policies in place, construction can continue to grow the economy, deliver essential projects and expand access to high-paying career opportunities.” However, it’s other factors that have “dampened” expectations.
This year’s AGC and Sage industry prognosis, “Dampened Expectations: The 2026 Construction Hiring and Business Outlook,” said that while there are “pockets of optimism” in data center and power facility construction and other private-sector markets, “contractors are worried about the broader economy, the possibility of a recession and the outlook for materials costs.”
Citing results of the AGC and Sage survey, Shoaf noted that 62% of construction firms list an economic slowdown or recession as this year’s top concerns. The 2026 Construction Hiring and Business Outlook survey was conducted in November and December and gathered more than 950 responses from industry personnel in 49 states and the District of Columbia. Sage is a global cloud-based business management group.
Other areas of concern for contractors in the survey include:
- Insufficient supply of workers or subcontractors
- Rising direct labor costs
- Worker quality
- Material costs
- Increased competition for projects
Construction Dive’s 5 Construction Trends in 2026 also included insight on material costs, tariff concerns and interest rates.
According to industry professionals referenced by Construction Dive, material costs will increase 2% to 4% – with cement and concrete holding steady and steel and aluminum going up in price due to tariff-related impacts. The article advises contractors to identify materials/products most impacted by prices in the project’s preconstruction phase to allow “for the maximum amount of time to pivot if necessary.”
On the topic of materials, AGC reported that 2025 increases in aluminum (+35%), steel (+17%) and copper/brass (+11.8%) were attributed to tariffs.
Forecasters stress the timing of road and bridge construction due to IIJA’s September end-date. “If lawmakers fail to act on reauthorization later in the year,” writes Construction Dive, “the pace of new infrastructure awards could slow. That could lead to increased competition and smaller margins for infrastructure contractors.”
In addition to infrastructure, the prognosis is also good in 2026 for data center and power facility construction.