Table of Contents
Abstract
The U.S. construction and contractor industry is set for growth, supported by federal investments and shifting digital marketing trends. Contractors are focusing on technology adoption and digital platforms to address labor shortages and capture new business.
This construction and contractor market report examines the U.S. industry for 2024-2025, focusing on market dynamics, sector-specific growth, technological advancements, and strategic marketing trends. Despite facing economic challenges such as high interest rates, inflation, and labor shortages, the industry is positioned for growth driven by federal investments in nonresidential projects and a steady demand in institutional construction. Marketing for local contractors emphasizes the adoption of automation and digital tools, addressing a projected need for 340,000 new workers in 2024 due to acute shortages in skilled trades like electricians, plumbers, and carpenters. (HBI report).
The marketing landscape for contractors is also evolving rapidly, with a shift towards digital platforms and content-driven strategies. Contractors are leveraging SEO, PPC, and social media to generate leads and enhance brand visibility. Reputation management on platforms like Google Reviews, Angi, and HomeAdvisor is reshaping how contractors acquire new business, particularly in the residential sector, where quality content and client testimonials are critical to consumer choices (Deloitte). This analysis incorporates insights from a variety of sources, including the Farnsworth Quarterly Contractor Index, Deloitte’s industry outlooks, and other market research, emphasizing technology adoption, sustainable building practices, and strategic marketing as key differentiators in the industry’s growth outlook.
Synopsis
As the construction and contractor industry continues to grow through 2026, nonresidential and institutional sectors lead in projected expansion, driven by federal funding and the push for sustainable practices.
The U.S. construction industry was valued at $1.8 trillion in 2022 and is projected to see varied growth across different sectors through 2026. Nonresidential construction, particularly in manufacturing and infrastructure, will likely be the primary growth driver, supported by substantial federal investments through the CHIPS Act, Inflation Reduction Act (IRA), and Infrastructure Investment and Jobs Act (IIJA). These initiatives are expected to stimulate growth across sectors and regions, with certain areas—such as the Midwest—poised to benefit significantly from infrastructure projects (Deloitte).
Conversely, the residential sector faces challenges from high interest rates and inflation, leading to a modest growth outlook. Contractors are adapting by focusing on smaller, more cost-effective projects and exploring alternative materials to manage costs. The Farnsworth Quarterly Contractor Index highlights a trend toward smaller project sizes in residential construction, which reflects the sector’s adjustments to economic pressures (Construction Dive).
Institutional construction, particularly in education and healthcare, is projected to grow steadily, supported by demographic trends and public funding. This sector’s growth aligns with increased demand for sustainable and energy-efficient construction practices, as compliance with green standards like LEED certification becomes more common. Contractors are meeting these demands with Building Information Modeling (BIM), modular construction, and other technologies to improve efficiency, reduce labor dependency, and control project costs (Deloitte).
The competitive landscape within the construction industry is evolving. With over 3.9 million companies and more than $10 billion spent annually on advertising, digital marketing is increasingly crucial. Contractors are adopting SEO, PPC, and social media strategies, while customer relationship management (CRM) tools help maintain client engagement and retention. Furthermore, reputation management on platforms like Google Reviews and HomeAdvisor has become vital for securing business, especially in the residential market, where client testimonials significantly influence consumer decision-making (Deloitte).
Labor market dynamics continue to challenge the industry, with an ongoing shortage of skilled trades, especially electricians, plumbers, and carpenters. The U.S. construction workforce is experiencing rising wages, which averaged $36.70 per hour in August 2023, and contractors are increasingly turning to automation and robotics to manage costs and mitigate labor shortages (HBI report). Technology adoption, sustainable construction practices, and efficient digital marketing strategies will be critical for contractors seeking to capitalize on industry growth and gain a competitive edge in the years ahead.
Key Takeaways
To provide a quick overview, here are the primary insights from this report. These Key Takeaways summarize the major factors influencing the construction industry’s trajectory, the digital marketing strategies driving contractor growth, and emerging trends to watch:
- Steady Growth Ahead: The U.S. construction industry is poised for growth through 2026, especially in nonresidential and institutional construction, driven by federal investments in infrastructure and manufacturing.
- Digital Marketing Dominates: Contractors are increasingly investing in digital marketing—particularly SEO, PPC, and social media—to reach local clients, boost visibility, and improve lead generation.
- Reputation Management is Essential: Platforms like Google Reviews, Angi, and HomeAdvisor have become crucial for contractors to build credibility and attract new clients, especially in the residential sector.
- Labor Shortages Challenge Growth: Skilled labor shortages in trades such as electricians and plumbers are impacting project timelines and costs, driving investments in automation and robotics.
- Future Trends to Watch: AI-powered automation, voice search optimization, and augmented reality are emerging digital marketing trends that will likely shape the future of the construction industry.
Together, these takeaways offer a snapshot of the current state of the U.S. construction industry and the strategies contractors are using to address challenges and pursue growth opportunities.
Projections
The U.S. construction & contractor industry is expected to grow steadily through 2025, driven by federal investments in infrastructure and manufacturing sectors and supported by initiatives like the CHIPS Act and IRA.
Overall Market Size
The U.S. construction and contractor industry is expected to grow steadily, driven by substantial federal investments in nonresidential sectors, particularly in infrastructure and manufacturing. The global construction market is projected to exceed $14 trillion by 2025, with growth largely supported by investments in green building, smart technologies, and sustainable materials.
The U.S. market will especially benefit from major legislative acts, including the CHIPS Act, the Inflation Reduction Act (IRA), and the Infrastructure Investment and Jobs Act (IIJA), which aim to stimulate manufacturing and infrastructure development to meet both economic and environmental goals (AIA, Deloitte, GlobalData). The Farnsworth Quarterly Contractor Index indicates that contractors remain optimistic about revenue growth, with many expecting moderate to significant increases in the coming year despite economic headwinds.
Nonresidential Construction
The nonresidential sector, especially manufacturing and infrastructure construction, is projected to experience robust growth. Federal funding under the CHIPS Act, IRA, and IIJA has led to a 65.5% increase in manufacturing construction spending as of August 2023 (Deloitte, GlobalData). Certain regions, including the Midwest, are particularly well-positioned to benefit from these initiatives.
To support this growth, contractors are increasingly adopting AI-driven project management tools, modular construction methods, and robotics, enhancing efficiency and reducing labor reliance. Nonresidential projects are expected to be a primary driver of growth, with technology and sustainability at the forefront of this expansion.
Residential Construction
The residential sector faces a challenging economic environment due to high interest rates and inflation, which have led to a projected modest growth outlook. Spending in the residential sector declined by 3% as of August 2023, with a limited recovery anticipated through 2025 (AIA, Deloitte).
Contractors are adapting to these challenges by focusing on smaller, more cost-effective projects and exploring sustainable materials that appeal to environmentally conscious buyers. Data from the Farnsworth Index also reveals a shift toward smaller project sizes in residential construction, highlighting the need for flexibility and adaptability to navigate economic uncertainties.
Institutional Construction
Institutional construction, particularly in education and healthcare, is expected to grow steadily, with spending projected to increase by 6% in 2024 and 4% in 2025 (AIA). This sector’s expansion is driven by demographic trends, public funding, and a rising demand for sustainable and energy-efficient facilities.
Compliance with green standards, like LEED certification, is increasingly prioritized, especially in public sector projects. Contractors are using technologies such as Building Information Modeling (BIM), robotics, and modular construction to improve project timelines, reduce labor dependency, and meet the evolving demands of institutional clients.
Industry Stats
Digital marketing has become a primary focus for contractors, with a significant shift in spending towards SEO, PPC, and social media to enhance local visibility and lead generation.
Marketing Spend and Digital Strategy
The U.S. construction industry, with over 3.9 million companies, has been rapidly increasing its allocation to digital marketing, now a significant portion of the more than $10 billion spent annually on advertising. As competition intensifies, contractors are focusing marketing dollars on SEO, PPC, and social media to achieve high ROI and capture valuable local leads. Contractors estimate that digital marketing spend accounts for close to 40% of their overall budgets, with SEO and PPC identified as the most effective strategies for attracting quality leads (BrightLocal).
Platforms like Google Reviews and HomeAdvisor are critical for building credibility, particularly in the residential sector where online reviews can heavily influence consumer choices. As reputation management grows in importance, contractors are dedicating more resources to encourage positive reviews, respond to client feedback, and maintain strong digital profiles. Video marketing has also emerged as a priority, with contractors using platforms like YouTube and Instagram to showcase projects visually, building trust and differentiating themselves in a crowded market (HubSpot).
Technology Adoption for Competitive Advantage
Many construction firms are also directing investments toward technology adoption, as digital tools become increasingly essential for maintaining a competitive edge. Building Information Modeling (BIM), artificial intelligence (AI) project management, and modular construction are among the technologies contractors are using to streamline workflows, enhance project accuracy, and reduce overhead costs associated with labor shortages. The industry’s adoption of these technologies is a strategic response to labor market constraints, helping firms maximize their marketing and operational investments by improving project timelines and cost efficiency (HBI report).
Labor Market Dynamics
The construction industry continues to face a tight labor market, particularly in skilled trades such as electricians, plumbers, and carpenters. Average hourly wages have increased to $36.70 as of August 2023, a 5.2% year-over-year rise. This wage increase is indicative of the high demand for skilled labor, which remains a barrier to growth for many contractors. To address these challenges, companies are integrating labor-saving technologies and investing in training programs, balancing their spending between labor solutions and marketing to ensure sustained business growth (Construction Dive).
Key Business Growth Metrics
In addition to digital marketing services, construction and contracting companies are focusing on strategic growth metrics such as client retention, project size, and revenue per project. The Farnsworth Quarterly Contractor Index reports that a significant number of contractors expect revenue growth over the next 12 months, with nonresidential and institutional sectors driving this optimism. Contractors report increased average project sizes and revenue per project, particularly in nonresidential construction, where federal funding and regional infrastructure projects contribute to higher-value contracts.
Overall, the industry’s emphasis on digital marketing, technological innovation, and reputation management is equipping contractors to meet current demands and position themselves for sustained growth. By aligning marketing investments with operational improvements, construction firms are building a robust foundation for success in an increasingly competitive market.
Digital Marketing Trends and Shifts
The construction industry’s shift from traditional advertising to digital channels is redefining marketing strategies for contractors and local service providers.
With an estimated $10 billion spent annually on advertising, the construction industry is increasingly prioritizing digital channels to generate leads and enhance visibility in local markets. Contractors and local service providers have moved away from traditional advertising, like print and radio, in favor of digital marketing strategies that provide precise targeting and measurable ROI. According to recent studies, SEO, PPC advertising, and social media marketing now represent the core of lead generation efforts for many contractors, allowing them to capture high-quality leads at a lower cost than traditional media (Deloitte).
Key Digital Marketing Channels
Contractors are leveraging SEO, PPC, and social media to generate local leads and engage clients in competitive markets.
SEO and Local Search Optimization
For contractors and local service providers, local SEO is essential to appearing in high-value local search results like “roofing contractors near me” or “best plumbers in [City].” By optimizing for local search terms, Google’s local map pack, and creating location-specific content, contractors can capture high-intent traffic directly within their service areas. Additionally, the integration of Google Business Profiles and ensuring accurate contact information across directories are crucial to ranking well locally (Search Engine Journal).
PPC Advertising and Cost Control
PPC campaigns on Google Ads and social media platforms have become indispensable for local service providers aiming to secure leads during peak seasons. Contractors are using targeted ad campaigns, often geo-targeted within specific service areas, to drive immediate visibility among potential clients. Effective PPC campaigns involve refining keywords, using ad extensions to highlight services, and creating localized landing pages that improve relevance and conversion rates.
Social Media Engagement and Lead Generation
Social media platforms like Facebook, Instagram, and LinkedIn are increasingly valuable for contractors and local service providers, particularly those serving residential and small commercial markets. Contractors can use these platforms to showcase past projects, post client testimonials, and engage with local community groups. Social media ads, especially with Facebook’s local targeting features, allow firms to reach specific demographics, driving both brand awareness and lead generation among nearby homeowners.
Reputation Management and Online Reviews
Online reviews on platforms like Google Reviews and HomeAdvisor play a vital role in establishing credibility and generating leads.
The Importance of Google Reviews, Angi, and HomeAdvisor
Reputation management is a vital aspect of digital marketing for contractors, with customer reviews on platforms like Google Reviews, Angi, and HomeAdvisor often determining who wins the job. For local service providers, these platforms act as digital word-of-mouth, where high ratings and positive feedback are key factors influencing potential clients. Contractors are increasingly proactive in requesting reviews from satisfied customers, responding to feedback, and addressing any negative reviews promptly, reinforcing their credibility and boosting local SEO (BrightLocal).
Video Testimonials and Project Walkthroughs
Video marketing is emerging as a powerful way for contractors to engage prospective clients. Through video testimonials, project walkthroughs, and “before and after” showcases, contractors can build trust and give potential clients a preview of their work quality. Platforms like YouTube and Instagram provide free or low-cost venues to host this content, while embedded videos on websites improve user engagement and time on site (HubSpot).
Content Marketing and Educational Resources
Educational content helps contractors build trust and establish authority while supporting SEO and lead nurturing efforts.
Educational Content and Thought Leadership
Contractors and local service providers are increasingly establishing themselves as industry experts by producing educational content—blog posts, how-to guides—that answers common questions and demonstrates expertise. This strategy serves dual purposes: it helps contractors rank for additional keywords, supporting their SEO, and builds trust with prospective clients. Educational content can explain common project timelines, budget considerations, and the unique value of a contractor’s services (Research Gate).
Advanced Analytics and ROI Tracking
Digital tools enable contractors to track and optimize marketing effectiveness, ensuring a high return on investment.
Measuring Campaign Effectiveness
With the shift to digital marketing, contractors have access to powerful analytics tools like Google Analytics and insights from social media platforms, enabling them to measure KPIs such as website traffic, conversion rates, and lead quality. These insights guide contractors in refining their strategies, identifying high-performing channels, and optimizing ad spend.
Tracking ROI from Digital Campaigns
Digital platforms allow contractors to calculate ROI with precision by comparing lead acquisition costs with project revenue. For example, Google Ads and Facebook Ads provide in-depth analytics that enable contractors to optimize budgets, test ad creatives, and refine target audiences for the best return on investment (Google Ads, Facebook Ads).
Future Trends in Digital Marketing for Contractors
Emerging trends like AI-powered automation, voice search optimization, and augmented reality are shaping the future of digital marketing in the construction industry.
AI and Automation for Marketing Efficiency
Automation tools powered by AI are helping contractors streamline tasks such as social media posting, PPC bid optimization, and email segmentation. These technologies allow even small local service providers to compete by automating repetitive tasks, freeing up resources for strategic initiatives and client interactions (Buildertrend).
Voice Search Optimization for Local SEO
With the rise of voice-activated search through devices like Amazon Alexa and Google Home, voice search optimization is becoming increasingly relevant for local service providers. Adjusting SEO strategies to capture voice search traffic—using conversational keywords and question-based phrases like “What’s the best way to maintain a deck?”—can help contractors reach this growing audience (Backlinko).
Augmented Reality (AR) for Customer Engagement
Some forward-thinking contractors are experimenting with augmented reality (AR) to enhance customer engagement. For example, residential contractors can use AR apps that allow clients to visualize projects—like remodels or landscaping—before they begin. While still emerging, AR can serve as a unique differentiator in the residential construction market, helping clients envision outcomes in their own spaces (Construction Equipment).
Conclusion
The U.S. construction industry is at a pivotal moment, with promising growth projected through 2026 across various sectors, fueled by substantial federal investments and a gradual shift towards sustainable, technology-driven practices. Nonresidential construction, in particular, stands to benefit from government initiatives like the CHIPS Act, IRA, and IIJA, which target infrastructure, manufacturing, and sustainable development. These federal policies, along with demographic trends, are also driving steady growth in institutional construction, especially in healthcare and education sectors where demand for sustainable, energy-efficient facilities is increasing.
However, challenges persist in the residential sector, where high interest rates and inflation have contributed to a modest growth outlook. Contractors in this sector are adapting by prioritizing smaller, cost-effective projects and integrating sustainable materials to meet evolving consumer expectations. Labor shortages across skilled trades remain a significant constraint industry-wide, necessitating investments in automation, robotics, and labor-saving technologies to address escalating costs and support project timelines.
Digital marketing has become a cornerstone for contractors looking to sustain growth and expand their client base. By shifting focus to digital channels like SEO, PPC, social media, and reputation management platforms, contractors are enhancing brand visibility, capturing high-quality leads, and reinforcing their competitive positioning. Platforms such as Google Reviews, Angi, and HomeAdvisor play an increasingly crucial role in attracting and converting leads, particularly in the residential sector. Additionally, advanced analytics, content marketing, and CRM tools allow contractors to maximize marketing ROI by measuring effectiveness and optimizing strategies.
Looking ahead, contractors who continue to embrace emerging digital trends—such as AI-powered automation, voice search optimization, and augmented reality—will likely stay competitive and capitalize on new growth opportunities. By aligning marketing investments with technological innovations, construction companies and local service providers can navigate current challenges, improve operational efficiency, and build a sustainable foundation for long-term success. Embracing these strategies will be essential as the industry evolves to meet the demands of a dynamic, increasingly digital marketplace.