Total construction spending fell for the fourth consecutive month in May, according to data released by the U.S. Census Bureau. Since April, spending fell 0.3%, while the year-over-year decline reached 3.5%.

“Uncertainty about tariffs, tax rates and labor availability are making it hard for many developers to risk moving forward with planned construction projects,” Ken Simonson, chief economist of the Associated General Contractors of America (AGC), said in a press release. “While public-sector demand remains solid, it just isn’t enough to offset the private-sector pullbacks in activity.”

The yearly decline marked the largest drop since 2019. Residential spending fell 6.5% year-over-year, while non-residential spending was down 1.1% in the same time period. On a monthly basis, spending in the residential and non-residential sectors fell 0.5% and 0.2%, respectively.

Anirban Basu, chief economist at Associated Builders and Contractors (ABC), expects the trend to continue through the remainder of 2025. “Given the many headwinds at play, including high interest rates, tight lending standards, elevated uncertainty and the effects of immigration and trade policy on labor and materials costs, spending may struggle to rebound during the second half of the year,” Basu said in statement.