Fernando de Querol Cumbrera
Research expert covering construction, loans, leasing, savings, and debt
Private construction in the United States - statistics & facts
The private sector is responsible for most of the buildings completed in the United States, as it finances most of the construction projects for commercial and residential real estate. Although the government tends to focus more on the construction of infrastructure, electricity and power infrastructure was the one of the segments with more private than public construction spending in 2023. In countries with universal healthcare system, the construction of hospitals is often mostly financed by the public sector, but in the U.S. the private sector was responsible for nearly 80 percent of the construction put in place for healthcare that year. Thus, the overall value of construction spending by the private sector in the U.S. in 2023 amounted to nearly 1.6 billion U.S. dollars, while the public sector spent less than half a billion U.S. dollars that year.
Behind the term of private construction there are several types of stakeholders participating in different parts of the process: real estate developers, to banks, and contractors. Together they make up the largest share of the construction industry.
Private construction during recessions
Private construction tends to be more volatile than public construction, as it depends more on market trends. For example, the financial crisis and its aftermath had a strong impact on the value of private construction in the U.S., as it fell from 912 billion U.S. dollars in 2006 to 501 billion U.S. dollars in 2011. In contrast, public construction can be more resilient. The construction spending by local and state governments did not fall as sharply during that period, dropping from 286.5 billion U.S. dollars in 2009 to 247 billion U.S. dollars in 2013.How are private construction projects financed?
In general, real estate developers are responsible for most private construction projects. Those companies tend to be responsible for the whole construction process, from buying plots of land to selling or renting the completed property. Greystar and Mill Creek Residential were two of the leading apartment developers in the U.S. in 2023. However, those companies need to request loans or use equity financing to cover all the costs of developing that property. The largest commercial and multifamily mortgage loan servicers in the U.S. in 2023 were Wells Fargo Bank and PNC Real Estate / Midland Loan Services.Behind the term of private construction there are several types of stakeholders participating in different parts of the process: real estate developers, to banks, and contractors. Together they make up the largest share of the construction industry.
