Construction Industry Outlook and Trends

New construction trends and innovations emerge each year with the potential to change the way construction businesses operate. Because of this, it’s crucial that construction-focused agents and their clients educate themselves on factors affecting the industry. 

Key construction industry trends to watch in 2025

1. The rise of advanced construction technology

Innovative technologies—such as more robust AI and robotics—are transforming construction faster than ever, reshaping how projects are designed, managed and delivered. This transformation of the industry is only getting started. In fact, the global construction technology market is projected to grow from $5.66 billion in 2025 to $10.34 billion by 2030.¹  

Technologies making a big impact include the following: 

• Generative artificial intelligence (gen AI)—Gen AI creates new content, such as text, images, 3D models and audio, based on provided data inputs. For construction businesses, this technology can optimize the planning and design of projects or analyze and improve existing risk management and project planning strategies. Some firms are also integrating gen AI into customer service initiatives or project dashboards to quickly handle client requests and internal queries. 

• Virtual construction—Often supported by building information modeling and digital twin technology, virtual construction uses 3D and digital models to design and plan architectural, engineering and construction projects. Virtual construction tools enable real-time collaboration, better cost control and schedule accuracy. These environments can be accessed via desktop computers, smartphones and augmented reality devices, allowing stakeholders to make informed decisions quickly.  

• Drones—Drones continue to transform construction operations by capturing aerial photographs and simplifying inspections for areas that may be too time-consuming, inaccessible or unsafe to evaluate. Additionally, drones help monitor progress, track equipment, detect unauthorized access and improve safety by reducing the need for manual inspections in hazardous areas.  

• 3D printing—Construction companies are leveraging 3D printing to create building elements and even entire properties or structures. By layering materials like concrete, metals or polymers according to established templates or designs, 3D printing technology reduces an organization’s reliance on manual labor, accelerates project completion and encourages sustainable building practices. It’s an application that can lower overall operational costs. 

• Robots—An increasing number of construction organizations are using robots to improve efficiency and worker safety. Specifically, robots are deployed for repetitive tasks such as bricklaying, welding and site surveying. Their use is reducing extra physical labor hours, which cuts down on strain and injury risk. Robots make repeatable processes more consistent, helping minimize errors.  

2. Improved safety through technology

Risks related to falls, trenching operations, heavy equipment and other job hazards make construction one of the most dangerous industries. As a result, employee safety is often a top-of-mind concern for construction organizations, and many employers rely on emerging technology to augment existing safety protocols. 

For instance, helmets—ubiquitous safety equipment in construction—can be outfitted with tech to integrate personal information about a worker. That way, responders have quick and easy access to pertinent contact information and medical history following an accident. 

Additionally, wearables are becoming commonplace on construction sites. These devices, such as watches, are worn by workers and can monitor their body temperature, heart rate, perspiration rate and activity level. This can be especially useful for outdoor workers who may be at risk for potentially deadly heat-related illnesses. 

3. Rising costs of construction materials

The shifting trade and tariff landscape persists deeper into 2025, affecting the availability and pricing of critical supplies like lumber, aluminum and copper. These disruptions are both direct and indirect. Directly, contractors may face material shortages in specific markets. Indirectly, broader tariff strategies can drive up costs, trigger retaliatory measures and further tangle global supply chains.  

For construction contractors, such conditions can result in stockpiling behaviors, reconsideration of contracts, and increased pricing and scheduling uncertainty. To better anticipate the impact, contractors should assess which of their material needs rely on imports and explore potential domestic alternatives. However, domestic supply isn’t immune to volatility either, and heightened demand may also drive up prices at home. Flexibility in sourcing strategies and pricing models will be essential for operational resilience. 

Beyond supply chain disruptions, inflation remains a pressing concern across industries. For construction businesses, this means the cost of building materials may continue to rise even higher, forcing organizations to rethink how they charge for their services. 

As inflation persists in 2025, it’s also important to review insurance policy details, such as ensuring property valuations and coverage limits are up to date and sufficient. Updating these details can help reduce the likelihood of large out-of-pocket expenses for business owners if a loss occurs. 

Mid-Year Outlook: Key Trends Shaping the Construction Industry in 2025 

4. Shortage of construction workforce

Labor shortages have been a significant issue for construction organizations for several years, in part due to more retirees than younger recruits. As it stands, according to a proprietary model by Associated Builders and Contractors, the construction industry will need to hire 439,000 net new workers in 2025 to meet construction demand.²  

These labor shortages are expected to continue, and as a result, construction businesses may experience significant project delays. In some cases, they may even be forced to turn down or delay business opportunities if they don’t have enough skilled labor to complete a project. 

Construction organizations may need to take significant steps to attract and retain qualified talent. In recent years, labor availability has improved across select segments when construction leaders innovate and promote technological enhancements.² Other opportunities include rethinking outreach efforts (e.g., participating in community events to engage with younger recruits or offering apprenticeships), upskilling existing rosters to create more well-rounded employees, offering competitive salaries and benefits, creating flexible work arrangements or even including all of these incentives to draw top talent. 

It is worth noting that the industrywide workforce has become significantly younger in recent years, with the median construction worker now younger than 42 for the first time since 2011. As a result, the pace of retirements is expected to slow this year.² 

Listen to our Economic Insights by Nationwide podcast for a closer look at economic trends impacting the construction industry, including:  

• Elevated interest rates and costs, coupled with economic uncertainty, have decelerated construction investments. 

• The industry’s labor market has been negatively impacted by sluggish investment in both residential and non-residential projects. 

• Tariffs on essential materials are likely to continue driving up construction costs, further complicating the investment landscape. 

5. Continued demand for sustainable building practices

While federal priorities around sustainability may shift with changing administrations, demand for greener construction practices continues to grow, driven by local regulations, investor expectations and the operational benefits of energy-efficient, low-emission building methods. 

Today’s construction businesses are expected to integrate eco-friendly materials, energy-efficient designs and low-carbon building practices across all phases of a project. This includes adopting methods like modular and prefabricated construction—which involve building components or even entire units off-site—to reduce waste and improve speed and cost-efficiency. 

In addition, technologies such as smart building systems, energy modeling software and embodied carbon tracking are being used to meet both client and regulatory demands. Many contractors are also incorporating sustainable features like solar panels; high-efficiency heating, ventilating and air conditioning systems; rainwater harvesting; and locally sourced or recycled materials. 

As these expectations become the norm—not the exception—contractors who proactively embrace sustainability will be better positioned to win business, manage risk and future-proof their operations. 

6. Support for workers’ mental health needs

Mental health in the construction industry remains a top concern in 2025, especially as lean crews face mounting pressure from labor shortages, long hours and materials uncertainty. Construction workers experience emotional strain at higher rates than the general population, and the industry continues to face a suicide rate more than three times the national average.³ 

To address this, many industry leaders are shifting from surface-level efforts to research-informed strategies that can genuinely support worker well-being. Groundbreaking guidance from the Construction Safety Research Alliance, developed with input from clinicians and construction professionals, provides a framework tailored to both field and office environments.⁴ These strategies emphasize practical steps, such as empowering supervisors to recognize signs of distress, creating psychologically safe jobsite cultures and integrating mental health into core safety practices. 

Stay prepared for your clients in the construction industry

The construction industry is constantly evolving, and it’s critical for construction organizations and the insurance agents who represent them to stay abreast of current trends. Doing so has the potential to create cost savings opportunities, increase worksite safety or even reduce project completion times.  

You can share resources from the Construction risk management hub on our Risk Management Solutions Center to help construction businesses build and strengthen their culture of safety.