13 Construction Industry Trends for 2025 and Beyond

1. Virtual Construction

Virtual construction is the use of tools like building information modeling (BIM), virtual reality (VR), and augmented reality (AR) to help contractors work more efficiently.

BIM software gives construction professionals an intelligent 3D image of a project. It’s a handy tool to keep architects and construction workers aligned throughout a project. The market for BIM is expected to grow steadily over the next decade at a CAGR of 13.3 percent.

Virtual design and construction tools use BIM models to plan scheduling, materials, costs, energy efficiency, and risk management. This can include VR and AR tools and devices to gain critical data, such as:

• Accurate building measurements via automation

• Easy simulation of architectural and structural changes

• Better insight on building mechanicals by ‘seeing through walls’

• Better safety and hazard training for construction workers

This helps ensure projects are built in line with client specifications and budgets.

2. Green Buildings and Sustainability

Green buildings combine sustainable design practices with eco-friendly materials. In commercial construction, green buildings are often designed to target specific LEED scores that certify different levels of sustainability.

This can include building elements like:

• Building envelope materials that make buildings more energy efficient and reduce their carbon footprint

• Rainwater management to capture and treat rainwater for better water conservation

• Energy-efficient water fixtures and gray-water recycling

• High-efficiency HVAC systems that reduce energy use

• Heat island reduction techniques like landscaping, planters, and reflective materials

Although this has been a trend for a while, new environmental, social, and governance (ESG) reporting requirements are causing commercial clients to examine their environmental impact, including the impact of their buildings.

3. Living Building Materials

Living building materials incorporate organisms to boost durability, reduce energy use, and absorb environmental toxins. They go a step beyond intelligent materials and interact with the environment on a microscopic level.

According to Penn State University, building materials and operations make up 30 percent of worldwide carbon emissions. Green building materials can help reduce this impact.

For example, green concrete, which includes bacteria that help it respond to humidity changes, can reduce carbon emissions by between 30 and 100 percent. Mycelium composites use fungi to create fireproof insulation that can replace polystyrene.

They may not be easy to find now, but it’s a trend worth watching as it evolves in the coming years.

4. Construction for Smart Cities

Smart cities are interconnected with IoT devices that collect data to improve operations and boost sustainability.

Last year, the US Department of Transportation allocated $94 million in funding to help smart city projects focused on transportation projects like smart traffic signals and connected vehicles.

And there’s plenty of inspiration to draw from cities around the world. IMD’s Smart City Index 2024 ranks the top three smart cities as follows:

• Zürich, Switzerland

• Oslo, Norway

• Canberra, Australia

For example, Zürich has traffic information available via mobile, online city maintenance reporting, and an app that monitors air pollution.

In the construction industry, the trend toward smart cities may increase the demand for buildings fitted with IoT sensors and energy-efficient technology.

5. Labor Shortages

The construction industry continues to face an ongoing labor shortage in 2024, creating challenges for construction firms needing talent.

The Associated Builders and Contractors trade association reports that there is now a shortage of half a million workers, and the industry will have to bring in almost the same amount in 2025 just to meet demand.

Additionally, over 20 percent of construction workers are over 55, indicating an increase in this trend as aging, experienced workers retire.

ServiceTitan’s director of customer relations, Chris Hunter, acknowledges the problem. “Everyone is talking about the labor shortage, and it's not going to get any easier, let's face it,” he says. “We're going to have to start finding these people, painting our mission or vision, where we're going, how they fit in, [and] what it means for them…”

To do so, contractors must devise creative strategies, such as skills-based hiring, on-the-job training, and salary boosting.

6. Material Cost Soaring

During the pandemic, strong demand and low supply caused lumber prices to soar with a 130 percent increase, according to the National Association of Home Builders. Construction companies experienced material price increases for concrete, asphalt, piping, steel, etc.

Today, material costs are still rising, but CBRE reports that the rate of escalation has decreased since its peak in 2022. 

However, just because inflation slows down doesn’t mean it’s reversing. Construction costs are still 42 percent higher than they were in February 2020.

The rate of increase varies by building material. For example, since 2020, the cost of steel mill products has risen by 58.7 percent, while softwood lumber has only increased by 12.9 percent.

This puts pressure on the industry's profit margins. To keep material costs down, contractors should use careful inventory management strategies to avoid wasted materials.

7. Improved Safety Measures and Systems

Research by legal services firm Slater & Gordon found that 41 percent of construction workers have felt obligated to work in unsafe environments.

However, the personal protective equipment (PPE) available today can make workers a whole lot safer. 

For example, the same study found that slips, trips, and falls were the most common workplace accidents in construction. Tech startup Spacebands is a wearable that can track slips and falls and send an SOS signal to your safety officer. It also tracks height, temperature, noise levels, and more to alert teams when working conditions are unsafe.

Voxel takes a different approach, using smart sensors that integrate with security cameras to detect safety issues on the job site.

There are many other smart wearables and PPE options that are revolutionizing safety, including Wi-Fi-connected wearables and cooling vests. Although many contractors are old-school, it’s worth looking into some new ways to keep workers safe.

8. Drone Technology

The construction industry is one of the fastest-growing adopters of commercial drones. It’s also one of the fastest-growing verticals for drone technology, estimated to be worth $6.2 billion by 2030.

Drones can survey and map construction sites using photogrammetry and LiDAR technologies for accurate 3D maps and measurements. They use AI to spot damage on rooftops.

They can also help site supervisors ensure site safety by inspecting the entire site remotely. This helps them spot issues that might cause workers to injure themselves on the job.

Construction companies can also use drones to make real-time decisions, providing supervisors and clients with instant updates.

9. Modular Construction and Prefabrication

Prefabrication is any building process where a significant portion of construction happens off-site, with the finished product transported in. 

Modular construction is a specific type of prefabrication that involves building parts off-site in a standardized way so they fit together when it’s time to assemble them on-site.

This trend has grown in popularity in recent years. It is showing more promise than ever as technology continues to make it possible to build houses in record time, with 80 percent less vehicle movement.

Industry headwinds have made it challenging to get prefab and modular factories off the ground so far since they’re reliant on upfront investments in production and a sea change in construction processes.

However, the outlook is optimistic, particularly since technology could positively impact the current housing crisis. It can also help reduce job site waste, safety hazards, and labor costs in the future.

10. Advanced Construction Industry Technology

The construction industry is embracing data-driven decisions: one study found that 57 percent of construction companies are looking for reliable financial and project data to help make better decisions. 

However, real-time data is hard to come by on job sites in an industry like construction without the right tools. Many contractors are turning to project management apps that are purpose-built for the industry to track core business data.

Construction management software like ServiceTitan helps give contractors an edge with an all-in-one platform that lets you track revenue and project costs and manage workflows across your entire team. 

You can access information on job costs in the office and on the job site to keep costs down as they come in.

You can also make accurate invoices to review, approve, and send to customers. You’ll be better equipped to manage your cash flow with all your invoices in one place.

Information gets fed back into your reporting tools so you can track performance and tie it directly to revenue.

Get an overview of performance across your entire business, or drill down to get data on individual workers.

11. 3D Printing

3D printing offers endless possibilities to save labor and material costs by building prefab structures off-site or directly on the job site.

The technology uses additive manufacturing on construction sites to build walls. It reduces costs and waste, speeds up construction time, and lessens injuries on the job. 3D printers automate construction, working around the clock until the job is finished.

Although the technology hasn’t gained mainstream popularity yet, 3D printing has made some strides this year.

Walmart recently announced it has 3D-printed an 8,000-square-foot addition at a retail location in Tennessee. In Austin, an entire high-tech neighborhood called Wolf Ranch is almost finished being built entirely with 3D printing technology—and people are already moving in.

As 3D printing becomes more mainstream, it could dramatically change the type of skills construction workers need and the materials the industry uses.

12. Digital Marketing

Digital marketing is essential for growing your construction business, but a recent study found that 44 percent of construction professionals believe their companies lack the necessary skill set to create a solid marketing strategy. 

However, that’s likely to change as more and more contractors realize the benefits of maintaining their brand presence online.

If you struggle to know where to start with marketing, ServiceTitan can be your best digital tool. With marketing software built-in, you’ll be able to track the revenue your ads bring in by campaign type, lead, and even location.

Want to get an even better head start? ServiceTitan’s Marketing Pro feature lets you create email campaigns, direct mail flyers, and Google Ads.

You can also use it to see and respond to online reviews across various platforms to manage your reputation.

What is the Construction Industry Outlook?

Overall, the outlook for the construction industry looks healthy. With new infrastructure policies rolling out to support the industry, construction is expected to grow by a CAGR of 4.7 percent to $1.53 trillion by 2028.

Taking advantage of that growth means keeping in step with some of the trends that will shape the work of construction crews of tomorrow.

If you don’t know where to start, try starting with software that helps you bring in more work and make data-driven decisions. That way, you’ll know what your customers are looking for and when you can make a big investment in something new.

ServiceTitan is a comprehensive construction business software solution built specifically to help contractors streamline their operations, boost revenue, and achieve growth. Our award-winning, cloud-based platform is trusted by more than 100,000+ contractors across the country.