Construction Industry Trends in 2025 and 2026 That Could Impact Your Budget

The construction industry has faced both growth and disruption in the first half of 2025, yet it continues to contribute to economic development. Certain risks remain that could affect the sector’s stability if left unmanaged. Construction businesses should monitor emerging trends now and begin preparing their risk management strategies for 2026.

Economic Headwinds

Although inflation has cooled from its record highs, it continues to influence costs across the construction sector. Rising input costs have led some construction businesses to adjust pricing to maintain financial stability.

Supply chain challenges remain a concern. Scarce building materials can increase project costs, while delays in deliveries may extend timelines and add expenses. Construction leaders should plan now for 2026 by evaluating contracts, supplier relationships, and project budgets to stay ahead of potential disruptions.

Building Code Changes

Updates to building safety regulations continue across jurisdictions. Key developments include:

• Mandatory reporting for safety incidents in high-risk buildings.
• Routine updates to aging infrastructure
• Use of resilient building materials to better withstand disasters

As 2025 progresses, construction businesses should review current operations to ensure compliance and consider adjustments for any anticipated 2026 code updates.

Insurance Claim Concerns

Social inflation and high-cost jury awards—sometimes called “nuclear verdicts”—continue to affect construction insurance claims. These verdicts may result from poor building practices, worksite safety issues or auto accidents.

Project disputes related to faulty work, building safety issues, or insolvency remain a factor in rising insurance costs. Businesses planning for 2026 should evaluate current coverage and work with insurance professionals to address potential gaps.

Environmental Exposures

Natural disasters remain frequent and costly, especially in high-risk areas. Projects in disaster-prone locations face extended timelines, increased costs, and potential coverage limitations as insurers adjust their policies or exit certain markets.

Construction companies should incorporate environmental risk planning into their 2026 strategy, including contingency plans for project delays, equipment replacement, and insurance review.

Planning Tips for 2026

To stay ahead in 2026, construction businesses can take proactive steps to manage risk and maintain operational stability:

1. Review insurance coverage: Ensure policies address emerging risks, including environmental exposures and rising claim costs.
2. Update safety and compliance programs: Align operations with new building codes and regulatory requirements.
3. Evaluate supply chain strategies: Identify alternative suppliers and plan for potential material delays.
4. Monitor project disputes: Address quality control and contractual issues early to reduce insurance claims.
5. Incorporate environmental planning: Develop contingency plans for natural disasters, including equipment protection and project timeline adjustments.

Looking Ahead

As we move through 2025, construction businesses face a dynamic landscape shaped by economic pressures, regulatory updates, rising insurance costs, and environmental risks. Staying informed and taking proactive steps now can help protect operations, maintain stability, and set the stage for success in 2026.

Learn more about construction business insurance solutions and risk management.