After months of record-breaking activity, the construction industry's future pipeline contracted sharply in October 2025, according to data from Dodge Construction Network. The Dodge Momentum Index (DMI), which measures nonresidential construction projects entering the planning stage and leads actual construction spending by approximately one year, fell 7.1% in October—a significant pullback after sustained growth throughout 2025.
The decline signals emerging headwinds that construction professionals should monitor carefully. According to Construction Dive's November 12, 2025 reporting, rising project costs and mounting macroeconomic risks are beginning to temper developers' enthusiasm for new construction planning.
While the 7.1% October decline is notable, the overall picture remains mixed. The DMI still sits 35% above its year-to-date 2024 level, reflecting strong underlying demand despite recent moderation. However, the trajectory matters for contractors and project planners.
Commercial planning activity declined 2.9% in October, while institutional projects dropped 15.2%—a more pronounced pullback. These declines came after a streak of record-setting months that captured significant pent-up demand.
Compared to October 2024, the index remains healthy: planning activity climbed 52% year-over-year, with commercial and institutional sectors up 54% and 49% respectively. However, this growth figure masks important nuances. According to Sarah Martin, Associate Director of Forecasting at Dodge Construction Network, much of the apparent growth reflects anticipated increases in labor and material costs rather than genuine expansion in real activity.
One sector bucking the trend is data center construction. Major technology projects continue to enter the planning phase, substantially propping up the DMI. The report noted significant activity in this category: Amazon data center campus buildings in Hamlet, North Carolina (three $500 million projects), CyrusOne Data Center in Illinois ($500 million), and Hut 8 Corp. data center in Batavia, Illinois ($500 million).
When data center projects are excluded from the commercial category, growth would decline from 54% to 43% year-over-year, illustrating the sector's outsized influence on overall metrics.
Despite the slowdown, October still saw significant project announcements. According to Dodge's November 12, 2025 report, 45 projects valued at $100 million or more entered planning in October. Major institutional projects included:
Healthcare and research facilities continue to attract significant capital investment, with these sectors demonstrating resilience even as other segments contract.
A critical finding from Dodge's analysis is that project cost escalation is inflating the DMI numbers themselves. "Recent growth should not solely be attributed to gains in real activity," explained Sarah Martin in the report. "Anticipated increases in labor and material costs are also driving up project expenses and are inflating the overall trend in the DMI."
This distinction is important for contractors and developers. It means that while the dollar volume of planned projects remains substantial, the number of projects or real square footage being planned may actually be contracting. Builders working on fixed budgets are seeing their purchasing power eroded, forcing difficult decisions about scope and scale.
Beyond commercial and institutional, other key sectors showed weakness in October:
The only bright spots remain data centers, hospitals, and manufacturing facilities—sectors driven by specific supply chain reshoring efforts and ongoing pandemic-era demand shifts.
Dodge Construction Network is forecasting further deceleration in construction planning in coming months. "In the coming months, Dodge anticipates activity to continue to decelerate on average, especially as macroeconomic risks continue to mount," stated Sarah Martin in the report published November 12, 2025.
The forecast reflects concerns about:
The October Dodge Momentum Index decline suggests that the pipeline of future work, while still robust by historical standards, is beginning to contract. For construction companies, this implies:
Increased Competition: As planning activity slows, developers will be more selective about which projects to greenlight. Contractors should expect keener competition on bids and potentially stronger negotiating pressure from owners.
Margin Pressures: Cost inflation that previously allowed pass-throughs to clients may become harder to implement in a cooling market. Contractors should review pricing strategies and productivity initiatives.
Workforce Planning: Slower project planning typically precedes workforce adjustments. Construction companies should monitor their backlog-to-forward-outlook ratio carefully.
Specialization Opportunity: The data center, healthcare, and manufacturing sectors continue to attract capital. Contractors with expertise in these sectors may find competitive advantages.
The October DMI decline occurs in a complex economic environment. While construction planning is cooling, other reports suggest that actual construction activity and existing project backlogs remain substantial. The key distinction is that future pipeline growth is moderating after exceptional 2025 performance.
Industry watchers note that this moderation, while notable, is not necessarily alarming. Planning cycles naturally fluctuate, and a 7.1% monthly decline from record levels may represent healthy market correction rather than structural deterioration.
However, if the forecast trajectory proves accurate and deceleration continues over coming quarters, contractors should prepare for a more competitive bidding environment and potentially tighter margins. The period from late 2025 through 2026 will test the industry's ability to navigate elevated costs and slower growth simultaneously.
Source: Construction Dive (November 12, 2025), Dodge Construction Network October 2025 Report
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