The construction market's rapid growth trajectory has cooled significantly as the Dodge Momentum Index (DMI) posted its first decline in six months, signaling important shifts in nonresidential construction spending patterns. The October 2025 decline offers critical insights for contractors, developers, and industry stakeholders about where market opportunities are shifting.
On November 7, 2025, Dodge Construction Network released its October 2025 Dodge Momentum Index report showing a 7.1% month-over-month decline. The index fell from a revised reading of 304.8 in September to 283.3 in October (using 2000 as the baseline of 100).
The DMI is a critical leading indicator for the construction industry that tracks the monetary value of nonresidential building projects entering planning phase. Because project planning typically precedes actual construction spending by 12 to 18 months, the DMI provides valuable foresight into future construction activity and spending patterns.
This leading indicator nature makes the October decline particularly significant for contractors planning their resource allocation, capacity planning, and business strategy for 2026 and 2027.
After several months of record-breaking planning activity levels, October brought the first slowdown, according to Sarah Martin, Associate Director of Forecasting at Dodge Construction Network. Martin notes an important caveat: "Activity remains solid across the board, especially for data centers and hospitals. However, recent growth should not solely be attributed to gains in real activity. Anticipated increases in labor and material costs are also driving up project expenses and inflating the overall trend in the DMI."
This insight is crucial for contractors to understand. The index growth in recent months reflects both genuine increases in project starts AND the inflation of project budgets due to expected labor and material cost increases.
The October slowdown shows different patterns across market segments:
On the commercial side, activity varied by project type:
Institutional projects showed more significant slowdowns:
The 15.2% institutional decline is particularly noteworthy because it represents a significant pullback from the exceptional activity in recent months.
Despite the October decline, the overall market remains significantly stronger than 2024 levels. Year-to-date 2025, the DMI is up 35% from the average 2024 reading for the same period.
Year-over-year comparisons are even more dramatic: The DMI in October 2025 was up 52% compared to October 2024. Breaking down by segment:
These strong year-over-year comparisons show that despite October's slowdown, the market remains substantially elevated from the previous year.
October saw 45 projects valued at $100 million or more enter planning phase, providing a window into the types of projects driving market momentum.
Commercial projects leading the planning phase included:
Data center projects dominate recent planning entries, reflecting strong enterprise demand for computing infrastructure and artificial intelligence capabilities.
Institutional projects planning in October included:
Healthcare and life science projects continue driving institutional demand, reflecting population growth and healthcare sector expansion.
The October slowdown after months of record activity suggests the market is moderating, though not crashing. Dodge anticipates that activity will continue to decelerate on average in coming months, especially as macroeconomic risks continue to mount.
For contractors, this signals several strategic considerations:
The deceleration suggests that aggressive capacity expansion initiated during the boom may need to be tempered. Contractors who overextended during high-activity periods face the risk of underutilized resources during a moderate slowdown.
Martin's observation about cost inflation driving index growth is significant. Contractors built higher project budgets into bids anticipating rising labor and material costs. If these cost increases materialize more slowly than expected, or if competition increases during a moderating market, margin pressure could intensify.
The strength in data centers and healthcare contrasts with weakness in warehouses and hotels. Contractors with specialized capabilities in high-growth sectors like data centers and life science facilities may see better opportunities than those focused on softer segments.
Martin's comment about cost inflation inflating the DMI is particularly important because it connects directly to current construction industry challenges. The construction industry continues facing significant labor shortages and material cost volatility. These factors are driving project budgets higher even when the actual scope of work may be unchanged.
This means the 35% year-to-date growth and 52% year-over-year growth partly reflect budget inflation rather than pure volume increases. For planning purposes, contractors should consider that some of this growth may not translate directly into proportional increases in labor hours or material volumes.
The October deceleration appears to be a normalization after an exceptional run rather than the beginning of a significant downturn. Several factors support continued solid (if moderating) activity:
However, contractors should monitor forward indicators carefully. Macroeconomic risks cited by Dodge remain significant, including potential policy changes, interest rate impacts, and labor market shifts.
For contractors planning through 2026 and 2027, the DMI decline offers important guidance:
Source: Dodge Construction Network, November 7, 2025 | Dodge Momentum Index October 2025 Report | Sarah Martin, Associate Director of Forecasting, Dodge Construction Network
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