California Construction Sector Newsletter

Date: February 12, 2026 Edition: Weekly Update – Key Insights for Construction Company Owners

This custom newsletter summarizes the latest available data and news on California’s construction sector, focusing on the past 7 days (approximately February 5–12, 2026) and incorporating trends from the previous 2–3 months (late Q4 2025 into early 2026). Sources are drawn from recent web lookups, including industry reports (e.g., JM Construction, Associated Builders and Contractors, FMI, Construction Dive), government announcements, and economic analyses. No major breaking headlines emerged in the immediate past week on widespread shifts, but ongoing themes include wildfire rebuilding acceleration, persistent material pressures from tariffs, labor shortages (though moderated demand), and soft residential activity with some nonresidential/infrastructure strength.

Building Permits

• Recent Activity (Past 7 Days): Limited statewide aggregates for early February 2026, but local reports show routine monthly/weekly issuances (e.g., cities like Capitola, Santa Clara, Ventura County publishing January/early February 2026 permit lists; Contra Costa County weekly reports through early February). No sharp statewide surge or drop noted in the past week.
• Key Highlight: Accelerated permitting in Los Angeles fire recovery zones (Eaton and Palisades fires). As of early February 2026, over 3,100–3,170 rebuilding permits issued (out of ~6,600 applications), at rates ~3x faster than pre-fire norms due to Governor Newsom’s executive orders suspending CEQA/Coastal Act requirements and federal support (e.g., Trump administration vows to speed processes). This creates pockets of opportunity for residential rebuilding.
• Trends from Previous 2–3 Months (Q4 2025–Early 2026): Permits lagged ~16% below historical averages through late 2025 (Sept–Nov data). Residential softness persisted, with statewide housing permits low in 2025. New 2026 Title 24 codes effective Jan. 1 (last major residential update until 2031 due to freeze) and policy pushes (e.g., affordable housing bond proposals) may ease some barriers, but red tape and local opposition remain challenges.

Financial Implication: Monitor LA-area fire rebuilds for near-term residential work; overall pipeline cautious—factor in potential delays inflating costs 15–25%.

Construction Starts

• Recent Activity (Past 7 Days): No major new statewide starts data released; reports note cooling in apartment/multifamily starts in high-supply California markets (per Yardi Matrix Q1 2026 insights). Pacific region spending forecast to rebound modestly.
• Key Highlight: Shift toward denser/multifamily and nonresidential (e.g., industrial, data centers, infrastructure). Fire rebuilding accelerates single-family efforts in affected areas.
• Trends from Previous 2–3 Months: Single-family residential (SFR) starts down ~13.3% YoY (six months ending Aug 2025: ~28,633 units), with full-2025 forecasts ~6.6% drop. Multifamily starts up ~16.7% (~23,325 units), reflecting density push. Nonresidential stronger (e.g., megaprojects, infrastructure). Overall residential below peaks into 2026; Pacific region spending expected +1.7% in 2026 (~$303B), led by health care/power.

Financial Implication: Prioritize multifamily, industrial, or infrastructure bids over pure SFR; wildfire recovery offers short-term boosts.

Material Cost Increases/Decreases

• Recent Activity (Past 7 Days): No sharp weekly shifts reported; ongoing tariff discussions (e.g., on lumber, steel, metals) add uncertainty.
• Key Trends: Costs elevated/volative. California Construction Cost Index (CCCI) showed late-2025 easing (Oct: 10,418 → Dec: 10,258, ~1.5% decline), but national inputs up 2.8% YoY (nonresidential +3.2%). Tariffs drive pressures: copper/steel volatility (15–40% spikes in spots), lumber risks from Canadian/Mexican imports. Overall escalation 4–5% annually (potentially 6–8% with tariffs); materials 25–28% above pre-2020 levels.
• Trends from Previous 2–3 Months: Some stabilization (e.g., lumber dipped modestly, steel fluctuated but no collapse), but upward tariff risks persist. Forecasts: nonresidential ~4.4%, residential ~5% inflation.

Financial Implication: Build 5–10% buffers in 2026 bids; lock in supplier contracts early, include escalation clauses. Hedge against imported materials (steel, lumber, electrical).

Labor Increases/Decreases

• Recent Activity (Past 7 Days): No major California-specific announcements; national focus on moderated demand.
• Key Highlight: Chronic shortages persist, especially skilled trades, but national need drops to ~349,000 net new workers in 2026 (down from prior years’ ~500k), due to modest spending growth and retirements. Wages likely upward pressure if shortages worsen.
• Trends from Previous 2–3 Months: 4–6% pay increases common where raised; baseline 4–5% wage inflation. Southern California outlook notes abundant opportunities in commercial/industrial despite macro headwinds.

Financial Implication: Expect continued upward labor cost pressure (budget 4–6%+ increases); invest in training/recruitment to mitigate shortages.

Other Key Information for Financial Decisions

• Opportunities: Fire rebuilding (LA area), infrastructure (e.g., Olympics prep 2028), industrial/data centers, potential affordable housing bonds/policies.
• Risks: Tariffs (materials up), interest rates/economic uncertainty, permitting delays outside fire zones, cooling multifamily starts.
• Overall Outlook: Modest Pacific rebound in 2026; residential soft but nonresidential/infrastructure stronger. Budget conservatively, focus on resilient sectors.

Sources: JM Construction weekly reports, Associated Builders and Contractors (ABC), Construction Dive, FMI outlook, California government releases (gov.ca.gov), Yardi Matrix, XL Construction, firsttuesday Journal, and local permit dashboards. Data as of mid-February 2026 lookups—monitor for updates.