November 11, 2025
Construction Planning Cools After Record Highs
After record-breaking surge, planning activity cools as cost inflation and macroeconomic uncertainty temper momentum
The surge that carried nonresidential construction planning to unprecedented heights has begun to moderate. The Dodge Momentum Index retreated 7.1% in October, settling at 283.3 after months of record-breaking growth, according to data from Dodge Construction Network. But this pullback tells a more nuanced story than simple deceleration—one where escalating labor and material costs inflate project values even as developers grow more cautious about committing to new ventures amid mounting economic headwinds.
The slowdown rippled unevenly across sectors. Commercial planning eased 2.9%, while institutional activity experienced a sharper 15.2% decline after sustained strength in recent months. Yet beneath these headline figures lies remarkable resilience: data centers and hospitals continue driving substantial volumes into the pipeline, even as uncertainty prompts developers to pause and reassess. Year-to-date, the index remains 35% above 2024 levels—a testament to how dramatically the planning landscape has shifted, though questions linger about whether this growth reflects genuine expansion or merely the inflationary reality of building in today's market.
The Dodge Momentum Index (DMI) tracks the dollar value of nonresidential building projects as they enter the planning phase, serving as a leading indicator that typically precedes actual construction spending by approximately one year to 18 months. This makes it a valuable tool for forecasting construction industry trends and economic activity.
DMI Change
Commercial Planning
Institutional Planning
Industry Perspective
"After several months of record-breaking levels, planning momentum slowed in October. 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 are inflating the overall trend in the DMI. In the coming months, Dodge anticipates activity to continue to decelerate on average, especially as macroeconomic risks continue to mount."
Market Challenges and Headwinds
The October slowdown reflects a convergence of pressures reshaping the construction planning landscape. On the commercial side, warehouse and hotel planning activity decelerated noticeably, even as data centers, traditional office buildings, and retail stores maintained momentum. The institutional sector experienced more pronounced weakness, with education and healthcare planning pulling back after months of sustained strength.
The cost inflation dynamic presents a particularly complex challenge for interpreting these trends. Rising labor and material costs are artificially inflating project values, making it difficult to discern whether growth in the DMI reflects genuine increases in construction activity or simply the escalating expense of building. This "cost contamination" of the data suggests that real activity levels may be softer than the headline numbers indicate—a critical distinction for industry stakeholders attempting to gauge true demand.
Sector Performance Highlights
Sustained Momentum
- Data centers continue driving substantial volumes
- Traditional office buildings maintain planning activity
- Retail stores show resilient momentum
- Recreational and public planning continued to grow
Cooling Activity
- Warehouse planning slowed significantly
- Hotel development activity decelerated
- Education planning pulled back after strong run
- Healthcare activity moderated from recent highs
Year-over-Year Performance
Despite October's monthly decline, the broader annual picture remains remarkably strong. Year-over-year comparisons reveal sustained expansion across both major sectors, though much of this growth reflects cost escalation rather than pure volume increases.
Note: When data center projects are excluded from the analysis, the commercial segment still showed growth of +43% year-over-year, demonstrating broad-based strength beyond the data center boom.
Major Projects Entering Planning
A total of 45 projects valued at $100 million or more entered planning throughout October, maintaining the substantial pipeline of large-scale developments despite the overall slowdown. The project mix reflects the continuing dominance of data center infrastructure alongside significant healthcare expansion.
Top Commercial Projects
Hamlet, North Carolina
Talkington Township, Illinois
Batavia, Illinois
Top Institutional Projects
San Diego, California
Philadelphia, Pennsylvania
Asheville, North Carolina
Forward Outlook
The October pullback may signal a new phase for construction planning—one characterized by more cautious decision-making as developers weigh opportunities against escalating costs and broader economic uncertainty. Dodge Construction Network anticipates continued deceleration in the months ahead, particularly as macroeconomic risks mount and the Federal Reserve maintains its cautious stance on monetary policy.
For industry stakeholders, the challenge lies in distinguishing signal from noise. While the DMI remains elevated on both year-over-year and year-to-date bases, the inflationary component embedded in these figures complicates any straightforward interpretation. The persistence of strong activity in data centers and healthcare suggests genuine demand in these sectors, but the broader market faces headwinds that could further temper momentum in coming months. What's clear is that the easy gains of the recent surge have passed—developers now navigate a more complex landscape where careful project selection and cost management will separate successful ventures from those caught by unfavorable market dynamics.
Year-to-Date Performance
Data Source: Dodge Construction Network
The DMI is a monthly measure based on the three-month moving value of nonresidential building projects going into planning, shown to lead construction spending for nonresidential buildings by a full year to 18 months.
