News Summary
The latest forecast for New Jersey’s construction industry suggests promising growth, with projected spending reaching over $16 billion. Key insights shared at the ACCNJ Convention highlighted a 17% increase in construction spending for the coming years, driven by economic shifts and interest rate cuts. While different sectors show varied performances, the civil construction segment reported remarkable increases in project starts and spending. Over the next five years, the construction pipeline stands at approximately $140 billion, indicating substantial expansion opportunities despite challenges like labor shortages.
Long Branch, New Jersey – The latest forecast for New Jersey’s construction industry indicates promising growth ahead, as significant increases in spending and project starts are anticipated for the coming years. Insights were shared during the Fall 2025 Convention held by the Associated Construction Contractors of New Jersey (ACCNJ), which attracted over 200 attendees at the Ocean Place Resort & Spa.
During the convention, Jeffrey Otteau, Managing Partner and Chief Economist of the Otteau Group, conveyed an optimistic outlook for the construction sector in New Jersey. Predictions suggest that construction spending in the state will surpass $16 billion in 2025, marking a remarkable 17% increase over 2024 levels. This surge comes despite a national decline in construction spending by 3%.
The positive forecast is bolstered by recent economic shifts, including an interest rate cut by the Federal Reserve, which lowered rates by a quarter percentage point on September 17, 2025. This reduction is expected to incentivize construction activity and advance the initiation of new projects. As interest rates decrease, the construction sector is projected to benefit from expanded spending, new project launches, and job creation. Alongside this, inflation rates have also dropped to 2.9%, potentially easing pressures on construction costs.
Sector Performance and Impact
The local construction landscape has shown varied performance across different sectors. Notably, the civil construction segment experienced an impressive 145% increase in project starts and an 88% increase in spending this year alone. Spending in this sector is expected to rise from $1.40 billion in 2023 to $2.34 billion in 2025.
In contrast, the industrial construction sector has seen a 73% drop in project starts, attributed to a market correction following an earlier phase of excess growth. Additionally, the multifamily housing market has demonstrated resilience, with spending up by 8% and construction starts increasing by 20%, indicating a robust demand for apartment projects.
Looking ahead, the projected future pipeline for construction projects in New Jersey stands at approximately $140 billion over the next five years. This pipeline reflects a significant expansion opportunity for the construction industry, despite concurrent labor supply concerns resulting from a shortfall of younger workers entering the field. Wage inflation remains another pressing issue, driven largely by the demand-supply gap in the labor market.
Current Challenges and Economic Contributions
The construction sector plays a vital role in bolstering local economies, generating significant direct, indirect, and induced economic impacts. It is poised to provide substantial value, stimulate deal flow, and enhance repair and improvement programs as commercial property values are anticipated to rise. Nevertheless, challenges persist, particularly in labor shortages and the added costs stemming from tariffs affecting materials.
The drop in the average price of Brent crude oil, which fell from $82 per barrel in 2023 to $68 in 2025, is expected to have further implications, suggesting potential reductions in construction costs moving forward. As the economic outlook improves, fueled by lower interest rates and easing inflationary pressures, the New Jersey construction industry appears set for a period of notable growth and resilience in the forthcoming years.
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Additional Resources
- NJBIZ: NJ Construction Outlook 2025
- Insider NJ: ACCNJ Report on Construction Industry
- Princeton Perspectives: 2025 New Jersey Economic Outlook
- NJBIZ: NJAA Construction Outlook
- ENR: ENR East 2025 Top Contractors
- Wikipedia: Construction
- Google Search: New Jersey construction industry news
- Google Scholar: New Jersey construction economic outlook
- Encyclopedia Britannica: Construction
- Google News: New Jersey construction 2025
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