Construction Appears Set to Downshift

Headwinds Intensify for the Construction Industry

Source: Economics Group of Wells Fargo Bank, N.A.Summary Construction Spending 2023 Outlook

  • A challenging macroeconomic backdrop will present the latest test for the construction industry in 2023. High inflation has resulted in tighter monetary policy and increased economic uncertainty. A looming recession stands to weigh on construction as a whole in the year ahead.
  • Residential spending took a hit in 2022 with private residential spending falling 20.1% from the peak hit in July. The ongoing housing correction was prompted by sharply higher mortgage rates and elevated home prices, which led to a strong pullback in home buying in 2022. Consequently, waning demand for homes has prompted builders to cut back on single-family home building.