Construction activity in Spokane County is expected to remain steady in 2026 while the industry faces uncertainty around interest rates, tariffs, and workforce shortages, industry experts say.

Cheryl Stewart, executive director of the Inland Northwest chapter of Association General Contractors of America, says most contractors have work scheduled for 2026 already, but she doesn’t expect much more than a small increase in projects going forward.

“There’s still a lot of uncertainty out there, but people are still building,” she says. “Projects are still going forward. The public side (of development) is still a big question mark.”

Stewart says public works projects, such as parks and schools funded by the recently passed Together Spokane school bond and parks levy, will increase next year. However, municipal road preservation projects throughout the region will lack funding from the Washington State Department of Transportation.

“(The Department of Transportation) is planning to move forward with the next North Spokane Corridor project,” she says. “However, right now (they) don’t have any money for preservation across the state so they would need an additional allocation from the Legislature to do any of that preservation work.”

The preservation work could cost about $100 million a year, if the money is made available, she says.

The current funding available for the North Spokane Corridor project is $1.9 billion, and additional funding was provided in the 2025 legislative session, according to an email to the Journal from the Washington State Department of Transportation.

In the private sector, construction projects are expected to remain strong through 2026, and the uncertainty around tariff impacts, immigration, a lack of skilled labor, and interest rates will have a bigger impact on construction activity, Stewart contends.

“We are seeing increased costs on materials and some labor uncertainty, but overall, it’s not necessarily stopping or shutting down projects,” Stewart explains. “At this point, it’s more that people aren’t sure what to expect so you’re seeing some private owners hold off to wait and see.”

Construction employment was down 7% in August from the year prior in Spokane and Spokane Valley area, according to data from the Bureau of Labor Statistics compiled by Associated General Contractors of America and presented to members of the Inland Northwest Chapter in September. Construction employment across the U.S. was up 0.7% in the same time frame.

For residential construction, high and unmet demand for single-family housing has kept home prices high, a trend that is expected to continue in 2026, says Joel White, executive officer at Spokane Home Builders Association.

“There's still so much unmet demand for the buying market and that's what's keeping the prices up,” he says. “And we just we haven't been able to build the number of homes that we really need.”

Through November 2025, Spokane County issued 1,409 single-family permits, 79 duplex permits for 158 units, and 56 apartment or condo permits for 1,303 units. White says he expects to see similar levels in 2026.

“We're slowing, but it's stable. There’s a lot of demand, but housing prices have stabilized as well,” he says. “You're not seeing the rapid increases we saw the last few years for new construction.”

The Spokane area is about 20,000 units short of demand, White says. Homebuilders typically complete 2,400 units a year including single family, duplex, and apartment units, which is just enough to match the area’s growth.

While demand is high because of a lack of available land to build homes on currently, the county’s 2026 Comprehensive Plan Update expected to be voted on mid-2026 could expand Spokane County’s urban growth boundary, giving developers more room to build additional housing to meet demands, White says.

“Our relief valve has literally been North Idaho. We are not keeping up, and the volume is going over to North Idaho,” he adds. “Spokane had a big year last year, but if you look at the permitting numbers, they saw a significant decline this year, and especially in single family. They've had one of the lowest single-family permitting years on record over the last 20 years.”

In Spokane County and the city of Spokane, record numbers of multifamily complexes were permitted in 2023 and 2024, says Steve MacDonald, director of community and economic development with the city of Spokane. The city issued permits for 1,010 units year-to-date in 2024, but only 460 units year-to-date in 2025.

“The numbers … were still up (this year) over our normal historic number of permits issued for housing, but a little bit down from the prior two or three years, and that's probably due to things going on in the larger economy,” he says. “What's going to happen next year is really going to be based on a number of those macroeconomic issues with interest rates and lending activity.”

Public project valuation decreased to $25 million, a decrease of 75% over the city’s prior four-year average, according to the city’s Development Services Center November 2025 Permit Report. MacDonald says the decrease is the result of funding for projects from several years ago that are now wrapping up and expects the new school bond and parks levy to provide funding for several new projects in 2026.

“Starting in 2026 and for the next number of years, with both the school district and the parks’ initiatives being voted in, we're going to start to see (valuation) ramp up,” he says. “It'll probably take well into 2026 but that's what we expect to see happen — for public job valuations to increase based on the school district and the parks having their proposals approved.”