Long Branch, New Jersey, September 29, 2025
News Summary
The construction industry in New Jersey is forecasted to grow significantly, with spending projected to increase by 17%. This surge is linked to recent interest rate cuts and improved economic conditions. Despite rising costs and labor shortages, the sector expects a boom, particularly in civil construction and multifamily housing, with a project pipeline of $140 billion anticipated in the coming years.
Long Branch, New Jersey – The construction industry in New Jersey is poised for significant growth, with projected spending expected to rise 17% above the 2024 levels, according to recent forecasts presented at the Fall 2025 Convention of the Associated Construction Contractors of New Jersey (ACCNJ). With over 200 industry professionals gathered at the Ocean Place Resort & Spa, Chief Economist Jeffrey Otteau from the Otteau Group unveiled optimistic projections for the sector, which could see aggregate construction spending exceed $16 billion in 2025.
The boost in construction activity aligns with the Federal Reserve’s announcement of a quarter-percentage-point interest rate cut on September 17, 2025. This reduction is anticipated to further stimulate project initiation and construction spending, providing a significant uplift despite the recent national trend of 3% decline in construction spending.
Otteau noted that while commercial real estate sales have taken a hit—from $13 billion to $6 billion due to rising interest rates—there is evidence of recovery beginning to surface in the marketplace. With construction costs reflecting a 34% increase in North Jersey and a 32% increase in South Jersey since the pandemic began, the new interest rate reductions could help stabilize and even lower construction costs in the upcoming years.
As interest rates decline, the resultant economic conditions are expected to favor the construction sector through increased job creation and project starts. Recent consumer data reflects reduced inflation rates at 2.9%, contributing to a more beneficial environment for new construction projects. Additionally, a decrease in the average price of Brent crude oil—dropping from $82 per barrel in 2023 to $68 in 2025—further indicates a potential easing of inflationary pressures on construction costs.
Specific sectors within the construction industry are experiencing varying degrees of growth. The civil construction sector has seen remarkable increases, with a 145% jump in project starts and an 88% rise in spending, now totaling $2.34 billion in 2025, up from $1.40 billion in 2023. Conversely, the industrial construction sector faced a considerable 73% drop in starts this past year, which was characterized as a necessary correction following periods of excessive growth.
The multifamily housing segment remains robust, reporting an 8% increase in spending and a notable 20% rise in construction starts, signaling a strong demand for apartment projects. Over the next five years, New Jersey anticipates a future pipeline of construction projects totaling around $140 billion, underscoring the growing significance of this sector in the state’s economy.
However, the construction industry is grappling with labor supply issues. A shortage of young workers entering the field has raised concerns, compounded by ongoing wage inflation, which is primarily driven by the demand-supply imbalance in the labor market. To sustain anticipated growth, the construction sector will need to overcome these challenges while dealing with tariffs that could add to construction costs.
Ultimately, the projected growth in construction values and increased deal flows will generate more repair and improvement programs as commercial property values see a rise. The direct, indirect, and induced economic impact of the construction sector plays a fundamental role in fostering job creation and increasing tax revenues within local economies.
Frequently Asked Questions
What is the projected construction spending increase in New Jersey for 2025?
Construction spending in New Jersey is expected to increase by 17% above the 2024 levels, exceeding $16 billion in total aggregate spending for 2025.
How have interest rates impacted the construction sector?
The recent quarter-percentage-point interest rate cut is anticipated to spur construction activity and project initiation, contributing positively to the sector’s recovery amidst a backdrop of rising costs.
What challenges does the construction industry currently face?
The construction industry is facing challenges such as a shortage of young workers in the labor market, ongoing wage inflation, and potential cost increases due to tariffs.
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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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