5 strategies to help contractors overcome interest rate uncertainty
- While interest rates have remained steady since 2025, rates are relatively high and uncertainty remains in both directions.
- Signs of rising inflation could force the Federal Reserve to raise rates, while new Fed chair Kevin Warsh may try to win support for a cut.
- Interest rate uncertainty is affecting the construction industry by making planning more difficult and making it harder to secure financing.
- In this environment, construction businesses should focus on strengthening client and partner relationships, building out financial forecasting to understand potential cash flow challenges and emphasizing growth in proven success areas.
While the Federal Reserve has kept interest rates the same since 2025, that stability hasn’t resulted in a boom for the construction industry. Instead, relatively high rates and uncertainty around whether those rates are likely to go up (if inflation continues to rise) or down (should new Fed chair Kevin Warsh win over enough of his fellow governors to pass a cut) is clouding project planning, delaying financing and forcing contractors to rethink risk.
For midsized general contractors, this economic limbo isn’t just a macroeconomic talking point — it’s a daily operational challenge. Keep reading to learn more about how your contracting business can adapt to meet the moment.
4 ways contractors are experiencing rate uncertainty
Interest rate uncertainty is redefining how contractors approach growth, manage risk and deliver value. Here are four key areas that have been affected:
1. Project planning is stalled
Higher borrowing costs and unclear rate trends are making financial modeling harder than ever. Developers are struggling to make the numbers work, especially with tighter assumptions around rent growth and cap rate compression.
The results are showing up across the industry. Construction spending is largely flat and showing few signs of growth, with industry sources saying projects are being delayed, downsized or shelved altogether. A cautious, wait-and-see approach is slowing momentum.
2. Financing is harder to secure
Banks are tightening lending standards, and even well-capitalized developers are experiencing slowdowns. Those delays trickle down and directly affect contractors through longer sales cycles, conditional commitments and added pressure to show financial stability.
3. Costs are volatile
Cash flow management is another pain point. Unpredictable tariff policies and supply chain instability are complicating cost forecasting. Labor costs remain high, too.
Some contractors — particularly those working on data centers and mission-critical sectors — have been able to pass on added costs through change orders. Others don’t have that flexibility.
4. Growth now requires discipline
In a volatile market, contractors have to shift from “expansion mode” to strategic discipline. That doesn’t mean growth is off the table — but it means teams have to be smarter about the opportunities they pursue.
Leading firms are doubling down on what they do best: core markets, trusted delivery models and geographies where they have the strongest relationships. They’re using discipline, focus and calculated risk to build resilience.
5 ways to overcome interest rate uncertainty
Contractors have never shied away from challenging work. With a focused approach, leaders can find ways to shore up their business — and even seize new opportunities.
These five strategies can help mid-sized general contractors navigate rate uncertainty:
- Sharpen your preconstruction services: When deals are harder to close, developers look for trusted partners who make projects work. Accurate budgeting, value engineering and risk analysis can help you stand out, build trust and win work.
- Strengthen your financial forecasting: Build cash flow models that account for financing delays, longer payment cycles and cost volatility. Scenario planning is essential in today’s climate.
- Double down on client relationships: In a tighter market, repeat business and referrals are essential. Clear communication, transparency and a “can-do” problem-solving approach can set you apart.
- Explore overlooked tax strategies: Federal programs for energy-efficient and clean construction are still available — but not for long. Take full advantage of project savings opportunities while you can.
- Focus on strategic growth: Stick to your core competencies and prioritize markets and delivery models where you have proven success and strong local ties. Growth is still possible.
How Wipfli can help
Staying informed also helps. Understanding the Fed’s signals, economic indicators, and policy shifts can help you anticipate change and adjust your strategies. That’s just one place where we can step in.
We know the current environment is tough. It’s also an opportunity for contractors to recalibrate and build smarter. At Wipfli, we help construction firms respond with clarity, discipline and courage — so they can grow through whatever comes next.
Whether you’re reviewing project forecasts, exploring energy tax credits or rethinking risk, we’re ready to help. Let’s talk about your goals.
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