California Construction Sector Newsletter | JM Construction
Mark Marshall — President, JM Construction
Edition No. 30 | Thursday, July 16, 2026
Coverage window: July 9 – July 16, 2026
Highlights from the Past 7 Days
The biggest week for housing policy in years. A comprehensive federal housing bill became law on July 11 — without a presidential signature. Alongside it: June input costs, contractor backlog, and a builder sentiment reading that puts the West at the bottom of the country.
Policy — Federal Housing Law Now on the Books
On July 11, 2026, the 21st Century ROAD to Housing Act became law. Its stated goal is addressing the housing affordability crisis by increasing supply, reducing costs, and streamlining construction processes. The bill passed 85–5 in the Senate and 358–32 in the House. President Trump canceled the signing ceremony, insisting the Senate first pass the SAVE America Act; Speaker Johnson sent the bill to the president on June 29, and because it was neither signed nor vetoed within the constitutional time limit, it automatically became law. Alianza Americas
What’s in it that touches our business:
- A prohibition on large institutional investors owning at least 350 single-family homes from purchasing additional single-family homes, with exceptions for certain build-to-rent and renovate-to-rent projects and credit-building rent-to-own programs. CNBC
- An expanded definition of factory-built homes intended to encourage innovation and affordable housing. Alianza Americas
- An FHA small-dollar mortgage pilot program, grants to manufactured housing communities under the PRICE Act, and appraisal reform allowing consumer-initiated reconsiderations of value. NCLC
- NAHB highlighted the law’s provisions on land-use and zoning, regulatory reform and financing, while noting more policy change is still needed at the state and local level. ABA Banking Journal
Our read: the land-use, zoning and factory-built provisions are the ones worth studying. Most effects are 12–24 months out, and several sections don’t take effect until October 1. This is a 2027–2028 tailwind, not a 2026 one.
Material Cost Trends
June PPI (released July 15): The producer price index for inputs to new nonresidential construction climbed 7.1% from June 2025 to June 2026, despite dipping 0.5% month over month, according to AGC’s analysis of federal data. AGC News
That monthly decline is the first breather in a while — but a 7.1% annual figure against a soft demand environment tells you tariff pass-through, not demand, is doing the work. Our California index confirms the direction: the CCCI reached 10396 in June, up from 10188 in May. ca
⚠️ Next week: the July 24 tariff calendar date is now eight days out. Firm pricing on imported metals and MEP equipment past that date carries real exposure.
Backlog, Confidence and Builder Sentiment
ABC Construction Backlog Indicator (released July 14): Backlog fell to 8.8 months in June, down 0.3 months from May but up 0.1 months from June 2025 — still longer than at any point between September 2023 and April 2026. The 13% of ABC members holding data-center contracts report 11.0 months versus 8.5 for the 87% that don’t. Confidence readings for sales and staffing rose, while profit-margin expectations fell to a seven-month low on rising input costs. Just 8% of contractors under $100 million in revenue have data-center work, against 41% of firms above that threshold. ContractorContractor
Builder sentiment (NAHB/Wells Fargo HMI, released July 16): Builder confidence fell two points to 34 in July, down from an upwardly revised 36 in June. Sentiment has now been below 40 for 15 consecutive months — the longest such stretch since 2012. Current sales conditions fell one point to 37, sales expectations for the next six months dropped two points to 43, and traffic of prospective buyers fell two points to 23. In July, 37% of builders cut prices, up from 35% in June and 32% in May, with the average reduction holding at 6%. Sales incentives were used by 63% of builders, the 16th straight month above 60%. National Association of Home Builders
The regional number is the one for us: on a three-month moving average, the Northeast rose one point to 45, the Midwest rose two to 45, the South fell one to 33 — and the West fell one point to 26. The West is the weakest region in the country by nineteen points against the Northeast and Midwest. That is our market. ABA Banking Journal
Labor Trends
No new state-level data this week; June state figures publish next week. National context holds: construction added 11,000 net jobs in June and 64,000 over twelve months, a 0.8% annual increase, with nonresidential doing virtually all of it. Residential trades are where the softness is concentrated — consistent with an HMI of 34 and a Western regional read of 26. ABC Ohio Valley
Bottom Line
- Assume residential single-family demand stays weak through year-end. Fifteen months below 40 on the HMI, a West reading of 26, and 37% of builders cutting prices is not a market that turns on a quarter.
- Margin discipline over volume. ABC members put profit-margin expectations at a seven-month low. Chasing revenue at these input costs is how firms get hurt.
- Eight days to the tariff date. Escalation clauses on metals and MEP, not firm numbers.
- Read the ROAD to Housing Act with a 2027 lens — particularly the land-use, zoning and factory-built sections.
- Multifamily and institutional remain the two segments worth pursuing in this market.
Sources
Alianza Americas and CNBC coverage of the 21st Century ROAD to Housing Act (July 11, 2026) · National Consumer Law Center, “Congress Passes 21st Century ROAD to Housing Act” · Bipartisan Policy Center, “Inside the Deal: What’s in the Final 21st Century ROAD to Housing Act” · AGC of America, “Construction Input Costs Remain Sharply Higher Than a Year Ago Despite June Decline” (July 15, 2026) · California DGS, California Construction Cost Index · Associated Builders and Contractors, “Construction Backlog Indicator Slips, Contractors Remain Confident in June” (July 14, 2026) · NAHB, “Builder Sentiment Stays Weak as Affordability Concerns Persist” (July 16, 2026) · ABA Banking Journal regional HMI breakout · ABC Ohio Valley analysis of June BLS data
Informational only. Consult your financial, legal and insurance advisors before making company-specific decisions.