- Project abandonments spiked 41.1% month-over-month in November, pushing ConstructConnect’s Project Stress Indicator to its highest level since July.
- Rising tariff-driven material costs are a major contributor to the abandonment trend, particularly impacting private sector projects.
- Despite widespread delays and cancellations, data center and manufacturing megaprojects continue to move forward, offsetting some of the downturn.
- Residential construction is under pressure, with a 15% overall drop, including a 39% decline in multifamily groundbreakings.
Tariff Pressure Mounts
According to Bisnow, developers are increasingly walking away from projects as tariffs drive up the cost of construction materials. ConstructConnect’s Project Stress Indicator rose to 125.7 in November, up 19.9% from October and 9.9% year-over-year — signaling significant market strain.
The spike was driven almost entirely by a 41.1% increase in project abandonments, according to ConstructConnect economist Devin Bell. The trend reflects the exhaustion of stockpiled materials that developers had secured before tariffs hit earlier in the year.
Private Sector Hit Hardest
Private sector project abandonments are up 5.7% year-over-year, while public sector abandonments dipped slightly by 3.2%. Project delays also rose, with a 16.5% increase in projects on hold from October. Rising construction costs—partly driven by tariffs—continue to weigh on developer decisions nationwide, especially as firms reassess the financial viability of planned capital expenditures.
Bell noted that “rising construction costs are pushing some owners and developers toward project cancellations,” as material prices remain volatile post-tariff.
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Bright Spots in Megaprojects
Despite growing abandonment rates, the overall industry isn’t stagnant. Dodge Construction Network reported a 21% jump in construction starts in October, thanks in part to large-scale data center and manufacturing projects.
Among the major developments:
- Meta’s $7.5B Hyperion data center in Louisiana
- Eli Lilly’s $1.7B manufacturing plant in Indiana
These billion-dollar builds are propping up activity even as smaller projects stall.
Residential Weakness Grows
The residential sector continues to soften, with an overall 15% decline in activity nationwide. Multifamily starts plunged 39%, while single-family home construction saw a modest 2% gain, reflecting shifting demand dynamics and higher financing costs.
Why It Matters
As tariffs continue to ripple through supply chains, developers are facing difficult choices. While large firms with deep pockets push ahead on critical infrastructure, many smaller or mid-size projects are being shelved — a trend that could have long-term implications for housing supply and commercial growth.
What’s Next
Expect construction activity to remain volatile into early 2026, particularly if tariffs remain in place or expand. Analysts will be watching December and Q1 2026 indicators closely for signs of stabilization — or further stress.
