BBVA says that the Mexican construction sector is projected to rebound in 2026 driven by a 10.9% real increase in federal infrastructure spending, prioritizing energy and transport projects to offset a sharp 22.5% contraction in civil works during 2025. This fiscal shift coincides with a strategic market transition toward social interest housing, supported by a 34.6% inventory growth and increased public financing through Infonavit. The recovery remains contingent on stabilizing consumer confidence and regional demand within an environment of rising property prices and evolving institutional risk management. 

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The Mexican construction and real estate sectors are entering a transition phase with projections pointing toward a rebound in 2026 following a significant contraction in 2025, says BBVA. The recovery will be primarily catalyzed by a 10.9% real increase in federal infrastructure spending and a strategic shift in the housing market toward social interest segments, the bank says.

According to BBVA’s Situation of the Real Estate Sector report for 1Q26, the sector’s recovery will be primarily catalyzed by a 10.9% real increase in federal infrastructure spending and a shift in the housing market toward social interest segments. This influx of capital is intended to reverse the trend of 2025, where the Construction GDP fell by 1% due to a structural downturn in the Civil Works subsector. That area experienced a 22.5% decrease in 2025, marking one of the sharpest drops in recent decades as a direct result of a 12.7% cut in the federal infrastructure budget.

Despite these challenges, the Building subsector showed resilience by maintaining a base of 4.7 million workers. Although labor formality dipped from 39.5% to 37.5%, the final months of 2025 signaled the start of a recovery with a 2.3% annual growth in employment during 4Q25. Input costs also stabilized with a moderate increase of 3.9%, providing a predictable environment for developers. This stabilization occurs alongside a 67.1% surge in the registration of new projects within the Registry of National Housing (RUV), reaching a volume not observed since 2016.

For 2026, the federal government has re-prioritized infrastructure by increasing the Public Works budget to over MX$650 billion (US$37.4 billion). Within this allocation, MX$280 billion is earmarked for energy infrastructure and MX$200 billion for transport projects, which is expected to create secondary opportunities for private participation through mixed-investment models.

Which Regions in Mexico Concentrate More Mortgages?

The mortgage market underwent a period of caution in 2025, characterized by a 0.5% drop in the number of credits and a 2.9% real contraction in total value. While commercial banks saw a 5.2% decline in activity, INFONAVIT acted as a stabilizer by growing 2.4% in credit volume. Market activity remains highly concentrated in Mexico’s major economic hubs, as Mexico City, Jalisco, and Nuevo Leon accounted for 41.3% of all national credits. The report notes that, when including Queretaro and Guanajuato, these five entities represent 52.7% of the total mortgage volume. In contrast, entities with lower economic development in the south and southeast, specifically Guerrero, Chiapas, Zacatecas, Oaxaca, and Campeche, account for only 2.8% of new credits. 

Average credit amounts reached MX$2.5 million nationally, though they exceeded MX$3 million in the Mexico City and Monterrey markets. Housing prices rose by an average of 8.9% in 2025, with double-digit increases in tourist destinations such as Quintana Roo and Baja California Sur. This sustained appreciation has pushed many buyers toward lower-value segments, leading to a 34.6% growth in inventory to 269,000 units focused on social interest housing.

 A notable divergence in delinquency rates was also identified, as commercial banks maintained a stable rate of 3% while INFONAVIT’s non-performing loan ratio reached 21.1%. The report notes that, unlike commercial banking, which operates under strict prudential criteria, INFONAVIT incorporates elements such as social collection and the deferred portfolio, which allow payments to be postponed and protect the borrower’s home. “The evolution of the portfolio between 2019 and 2025 shows that delinquency responds both to economic shocks and to institutional decisions oriented toward inclusion and social protection. In this context, INFONAVIT’s main challenge is to achieve a balance between its social mandate and its financial sustainability,” reads the report.

Labor Market Dynamics and Buying Power

The report notes that the evolution of the labor market offers a nuanced view of mortgage demand. While the real wage mass and the number of IMSS-insured workers showed a loss of dynamism for much of the previous period, both variables showed signs of stabilization at the end of the year, with wage mass growing by 4.5% and insured workers by 1.3%. 

However, a clear differentiation exists by income level: the segment earning up to 3 Units of Measure and Update (UMAs) contracted by 7.2%, limiting demand for social interest housing. Conversely, the middle and high-income segments, between 3 and 6 UMA, grew by 8.7% and 4.1% respectively, indicating a more resilient base for middle and residential housing markets.

Despite the stabilization of employment, consumer confidence regarding home acquisition remains in a contractive phase. The housing confidence component fell by 10.1%, a sharper decline than the general consumer confidence drop of 5.3%. This suggests a structural rather than purely cyclical cooling in the intention to invest in real estate, possibly linked to rising property prices.