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Green Building News

The 2025 Forecast for Construction Is a Mixed Bag

Industry pros share insights on AI, green building materials, labor issues, and more

Mass timber is an emerging material in North American construction. Even in an industry as slow to change as this one, Mass timber is showing promise.

As we ease into 2025, we are contending with the established reality that the last few years haven’t been great for the construction and home building industry. By some accounts, downward trends have been unfolding for the better part of the last two decades. Looking back, the biggest contributor was the Great Recession, when housing starts in the U.S. hit an all-time low of 478,000 in April 2009. The other big factor, naturally, is the Covid pandemic, which exacerbated (or triggered) interrelated issues like global inflation, supply chain disruptions, and labor shortages.

“The ecosystem represents 13% of global GDP, but construction has seen a meager productivity growth of 1% annually for the past two decades,” observed a report from McKinsey, published in June 2020. “Our research suggests that the industry will look radically different five to ten years from now.”

Those are just the broad strokes. But several industry pros don’t see doom and gloom on the horizon. On the contrary, they see a silver lining, in one form or another.

Accelerating change

We are now officially in the post-Covid era. And while the pandemic didn’t kneecap the home construction industry to the extent the Great Recession did (home starts rebounded to respectable levels in April 2022, about on par with turn-of-the-century figures), Covid was an altogether different kind of crisis. While people would be hard-pressed to call Covid a great equalizer in any context, there is general agreement that the global health crisis has been the great catalyzer for emerging trends like prefabrication and modularization, green building practices, AI-assisted management of supply chains, and more to assume greater share of the market.

“You don’t have to look too hard to see that we’re several hundred thousand to a couple of million people short in the trades, just to keep things going at a healthy clip,” says Steve Smith, director of partnerships at Bluebeam, a construction software developer. Smith likens current trends to a funnel; at the top are a lot of new capital-intensive developments going to bid, but the bottom is “constrained by the number of people” equipped to carry out that work. “Of course, you can do more with more, but the mantra now is to do more with the same.”

Despite the numbers, Smith sees headwinds in the form of what he calls “meat-and-potatoes innovations” in AI tech. “I’ve seen more traction with human-assisted AI than anything else. Instead of replacing people, it’s making them more efficient. That is moving the needle for our industry.” In the same vein, he advises that AI shouldn’t be seen as a standalone solution but just another tool in our collective kit.

“We can expect to see more strategic investments in AI and machine learning technologies to bring enhanced productivity and interoperability to more workers,” says Usman Shuja, Bluebeam’s CEO. “Diversifying suppliers to mitigate tariff impacts and staying close to a rapidly shifting regulatory landscape will also be top of mind in 2025.”

In a nutshell, optimistic outlooks on AI’s potential seem to embody the “do more with the same” ethos. When asked how he quantifies success regarding where his industry needs to be, with AI or otherwise, Smith points to three practical considerations: reducing waste, reducing embodied carbon, and training more people. He further adds, “If we’re going to solve the housing shortage, particularly in North America, we need to restore dignity in the skilled trades.”

Using better materials

The last few years have likewise seen more companies promoting circularity and greater advocacy for healthy, low-impact materials. Examples abound, including bio-based insulation materials that use hemp, cork, and wood fiber; natural mineral and plaster finishes with no VOCs; and developers placing greater emphasis on regional supply chains and material reuse. While these trends are hardly new (they have existed for millennia, if we’re getting technical), the regenerative materials movement is indeed a growth market.

Since 2016, annual growth projections of 11.6% have remained steady for the ever-evolving green building materials market, comprising everything from mass timber products and rammed earth to ultra-low-carbon cement mixtures. As of 2024, that global market was valued at $474 billion and by 2032 is projected to reach nearly $1.2 trillion. The acute impacts of this growth will be felt in cities throughout the global North, most of which are still experiencing significant population growth with no end in sight. (The UN predicts that 68% of all people will live in cities by 2050.) As the construction industry responds to continued urbanization, either in the form of new buildings or adaptive reuse of existing ones, a market increasingly flooded with hemp, mycelium, straw, cellulose, green concrete, and more will all be part and parcel of this growth.

Still, there is the matter of what has continually spurred such growth, from early R&D to manufacturing to commercialization. In many cases, federal grants through the DOE, USDA, EPA, GSA, and other federal agencies have helped get thousands of startups in the green building and climate tech space off and running. This trend accelerated exponentially in the last four years via the U.S. government’s Greenhouse Gas Reduction Fund and various incentives built into the Inflation Reduction Act. Should all (or most of) that money dry up, given the Trump administration’s overtures (issued, challenged, and rescinded in a 24-hour period) to freeze all federal financial assistance to nongovernmental organizations that, in part, promote “DEI, woke ideology, and the green new deal,” continued domestic market growth no longer feels like a foregone conclusion.

The future is bright for mass timber

As so-called green building materials go, none is enjoying a brighter spotlight than mass timber. In recent years, the steady growth of domestic supply chains and manufacturing capacity has helped curb builders’ over-reliance on engineered timber sources from Europe. And while North America remains well behind the likes of Austria, Sweden, and Norway in terms of sourcing and streamlining production, all signs point to North American markets becoming better equipped to establish domestic value chains, top to bottom.

According to Nic Wilson, CEO of Mass Timber Group, “the biggest players in the North American mass timber arena [have reported] much bigger demand now, compared to 2023 and 2024. And for suppliers, orders are pretty much maxed out for 2025 and 2026.” Wilson says the future for mass timber is akin to a “modern-day gold rush.” As for the usual culprits that have impacted the construction industry in recent years, such as supply chain disruptions, labor shortages, and tariffs, he is confident that “all those things will get absorbed and figured out, especially if the industry continues to boom.”

Now, if only this level of resilience could be applied to other facets of the building industry, where labor shortages and economic volatility are still acutely felt, then all told, a healthy mix of skepticism and optimism is indeed appropriate for 2025 and beyond.


Justin R. Wolf is a Maine-based writer who covers green building trends and energy policy. He is the author of Healing Ground, Living Values: Stanley Center for Peace and Security, published by Ecotone.

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