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
The North American construction industry, after experiencing a remarkable growth of 6.5% in 2024, is poised for a significant slowdown in 2025. The U.S. construction sector is expected to witness only a 1% real-term growth in the coming year, while Canada is projected to grow at a rate of 2.6%. This leads to an overall average growth of 1.2% across North America.
A substantial segment of the U.S. construction market is focused on the residential sector, which accounted for approximately 43.3% of all construction activities in 2024. This sector is particularly susceptible to the pressures of escalating costs driven by recent tariffs.
The U.S. has enforced blanket tariffs ranging from 10-25% on all trading partners. In addition, reciprocal tariffs between 11-50% are applied to countries lacking formal trade agreements with the U.S. The tariffs on steel and aluminum have surged from 25% to an alarming 50%, resulting in material cost increases of 5.8-6.8%. These rising costs add roughly $10,900 to the price of an average new single-family home.
Furthermore, a survey has indicated that 25% of members from the Associated Builders and Contractors reported either cancellations or postponements of their projects due to tariff-related cost challenges as of May 2025. This trend of project cancellations emphasizes the mounting financial strain on the construction sector.
Compounding these issues are proposed budget cuts in the U.S. federal budget, which could cut crucial funding for key programs by $26.7 billion. These cuts may worsen the situation regarding housing affordability, particularly in conjunction with high mortgage rates, which have reached 6.84% for 30-year loans.
In April 2025, new building permits in the U.S. are forecasted to decline by 3.2% year-on-year, and completions are expected to drop by 12.3%. This decline reflects the ongoing struggles within the industry and highlights the challenges faced by builders and developers.
Canada, on the other hand, aims to substantially ramp up its construction efforts, with plans to double homebuilding to 500,000 units per year. This initiative is supported by CAD 25 billion in debt financing and CAD 1 billion in equity.
The infrastructure projects in the U.S. have also been affected by a temporary halt in funding from the Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA), leading to the cancellation of several grants worth a total of $1.7 billion.
Despite the challenges, there are growth sectors within the U.S. that are still projected to expand—most notably, technology infrastructure and energy-related areas. Significant investments are expected in artificial intelligence, data centers, and renewable energy projects, which offer an optimistic counterbalance to the overall construction slowdown.
Looking beyond North America, Latin America is also bracing for economic troubles, with a projected 0.6% contraction in 2025. Notably, Mexico faces a considerable decline of 5.9% in its construction sector. However, Brazil’s construction sector is forecast to grow by 2.5% due to increased construction employment, while other countries like Peru and Ecuador expect growth rates of 3.8%, supported by robust investments in infrastructure and energy.
Overall, the future of the construction sector in North America will hinge on the stability of tariffs and trade negotiations as it navigates this challenging landscape.
Frequently Asked Questions
What growth is projected for the North American construction industry in 2025?
The North American construction industry is forecasted to experience an average growth of 1.2% in 2025.
What is the projected growth for the U.S. construction sector in 2025?
The U.S. construction sector is projected to achieve a mere 1% real-term growth in 2025.
What challenges is the U.S. construction sector facing?
The U.S. construction sector is facing challenges such as tariff-driven cost pressures, project cancellations, and proposed budget cuts that could reduce funding for key programs by $26.7 billion.
How much have tariffs affected the cost of new homes?
Tariffs on steel and aluminum have led to material cost increases of 5.8-6.8%, adding approximately $10,900 to the cost of an average new single-family home.
What are Canada’s goals for homebuilding?
Canada aims to double homebuilding to 500,000 units per year with backing from CAD 25 billion in debt financing and CAD 1 billion in equity.
What are the growth prospects for other countries in Latin America?
Brazil’s construction sector is projected to grow by 2.5%, while countries like Peru and Ecuador expect growth rates of 3.8% due to infrastructure investments.
Summary of Key Features
| Feature | Details |
|---|---|
| Overall Growth Projection for North America in 2025 | 1.2% |
| U.S. Sector Growth Projection | 1% |
| Canada’s Sector Growth Projection | 2.6% |
| Impact of Tariffs on New Homes | Increased costs by $10,900 |
| Proposed U.S. Budget Cuts | $26.7 billion |
| Planned Homebuilding in Canada | 500,000 units/year |
| Grant Cancellations Due to Funding Halts | $1.7 billion |
| Growth in Brazil’s Construction Sector | 2.5% |
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 FL News
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