This article considers the state and prospects of the construction industry development in the current economic situation. A special attention is paid to the issues of the innovation implementation in the construction industry, which will allow one to ensure search for working methods of harmonious development of the Russian economy.Issues in development of the innovation activities in construction are a complex system of measures, aimed at creation, development, mastering, production and commercial application of innovative products. Innovative activity in construction has some industry-wide specifics, which shall be taken into account. The construction industry undergoes cycles of development in connection with development trends of both national and global economy. Currently, there is a reduction in the number of orders for design, installation and surveying works. The financial situation of many enterprises specializing in construction works has become very complex. The construction industry is multi-faceted. Besides erection of buildings and structures, it includes creation of new high-tech materials, technologies, scientific developments in design, training of personnel for operation with innovative products. To a large extent, complex solution and improvement of these processes are simplified if organized management with governmental participation is involved.Thus, implementation of innovation activities in the construction industry is currently impeded due to prolonged market reforms and negative effects caused by the global financial and economic crisis. It is manifested in using obsolete production assets, insufficient volume of investments for development of production assets, lack of qualified personnel, gaps in the regulatory and legislative framework, etc.The paper uses one of the regions of Russia to consider principal development trends of innovation in construction, to analyze main factors impeding activation of the construction industry, to determine prospects for development of innovation in the Russian Federation, which are also being studied and discussed by many other specialists and practitioners.