California Construction Sector Newsletter | JM Construction
Mark Marshall — President, JM Construction
Edition No. 28 | Thursday, July 23, 2026
Coverage window: approx. July 9 – July 23, 2026
Highlights from the Past Two Weeks
This was an unusually data-heavy stretch — Census, BLS, BLS-PPI, ABC and Dodge all reported. The headline for California: we are the worst-performing construction labor market in the country right now, and our cost index just posted its sharpest monthly jump of the year. Multifamily permitting remains the one bright spot, and it is a big one.
Three things actually moved:
- California shed more construction jobs than any other state for the fourth consecutive month (June data, released July 21).
- The California Construction Cost Index jumped 2.0% in a single month in June — after five months of essentially flat readings.
- SB 79 (transit-oriented housing) and SB 779 (CSLB penalties) both took effect July 1, and the SB 779 fine increases are now live.
Building Permits and Construction Starts
**National (June 2026, released July 17):**Privately-owned housing units authorized by building permits ran at a seasonally adjusted annual rate of 1,367,000 in June — 3.0% below the revised May rate of 1,410,000 and 2.3% below June 2025. Single-family authorizations came in at 871,000, down 2.4% from May. Housing starts were at a 1,427,000 annual rate. Single-family starts slipped 0.2% to 895,000 units and were down 3.2% year over year, with single-family permits down 0.2% year over year — weighed down by higher mortgage rates and unsold new-home inventory. U.S. Census BureauGV Wire
California — the split market:
- Through the first five months of 2026, California issued the largest number of multifamily permits in the nation and posted a 47.9% year-over-year increase. Texas, second nationally, recorded a 23.3% decline. Eye on Housing
- Nationally, single-family permits through May totaled 380,130 — a 6.1% decline from the same period in 2025 — while multifamily permitting rose 6.5%. Year-to-date single-family permitting declined in all four Census regions. Eye on Housing
- Single-family starts in California during the six-month period ending February 2026 were down 11% from the same period a year earlier, while multi-family starts were up 74.5%. firsttuesday projects SFR starts to finish 2026 below 2025, with the year already tracking 8% behind as of March. Firsttuesday
Nonresidential planning pipeline: The Dodge Momentum Index fell 1.9% in June to 271.7, with commercial planning down 6.8% and institutional planning up 10.9%. Dodge attributed the pullback to moderating data-center activity, noting that planning accelerated across nearly every other sector. Dodge Construction Network
Backlog and confidence: ABC’s Construction Backlog Indicator fell to 8.8 months in June — down 0.3 months from May but up 0.1 months from June 2025, and 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 of backlog versus 8.5 months 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. Contractor
What this means for us: the have/have-not gap is the story. Only 8% of contractors under $100 million in annual revenue have data-center work, versus 41% of firms above that threshold. For a Central Coast GC without data-center exposure, the realistic backlog benchmark is the 8.5-month figure, not the headline. Contractor
Material Cost Trends
The California index moved — meaningfully. Per DGS, the California Construction Cost Index ran 10159 (January), 10159 (February), 10124 (March), 10135 (April), 10188 (May), then 10396 in June. That’s roughly +2.0% in one month and about +2.0% year over year against June 2025’s reading of 10195. After a flat first half, June broke the pattern. July’s figure posts in the second half of this month. caca
National inputs: The producer price index for inputs to new nonresidential construction rose 7.1% from June 2025 to June 2026, even though it dipped 0.5% month over month, per AGC’s analysis of data released July 15. AGC News
The metals and fuel picture (May data, most recent detail): Construction materials prices jumped 2.6% in May and were up nearly 10% year over year. Steel mill products rose 6.7% year over year, copper and brass mill shapes 26.8%, and aluminum mill shapes 48.8%. Copper wire and cable was up 24.2%. AGC chief economist Ken Simonson tied a 19.9% monthly and 105.9% annual increase in the diesel PPI to the Middle East conflict — which in turn is feeding trucking costs and the fuel surcharges many contractors are now paying on deliveries. Engineering News-Record
Tariff structure as of the Q2 update: Steel, aluminum and copper items made entirely or mostly of those metals carry a 50% tariff, with derivatives at 25%. Industrial and electrical equipment incorporating those materials — transformers, panel boards, conduit systems — faces 15%. Softwood lumber carries 10%, with derivative products at 25%. A global 10% baseline tariff was in effect through July 2026. For steel-intensive scopes, embedded tariff cost is running roughly $15–$25 per square foot on mid-rise multifamily depending on structural system and equipment mix. Tax Credit AdvisorTax Credit Advisor
⚠️ Watch item: Industry advisories have flagged July 24 as a key expiration date in the tariff calendar, alongside the Section 301 procedural transition. That’s tomorrow. Anything we’re pricing this week on imported metals or MEP equipment should carry an explicit escalation clause rather than a firm number. ABC Carolinas
Practical read: diesel-driven delivery surcharges are the underappreciated line item this quarter. Copper-heavy MEP packages and structural steel remain the exposure concentrations. Concrete, aggregate and other low-import-content materials continue to behave better because demand is soft.
Labor Trends
California is the national outlier — and it’s getting worse, not better. California lost the most construction jobs in the nation from June 2025 to June 2026: −15,400 jobs, or −1.7%. Virginia was next at −4,600 (−2.0%), followed by New York, Georgia and Michigan. Nationally, 33 states and D.C. added construction jobs over the year and 28 states plus D.C. added jobs from May to June. Tedmag
The four-month trajectory for California: −9,400 (March), −14,500 (April), −13,100 (May), −15,400 (June). This is a sustained contraction, not a data blip. Associated General Contractors of America + 2
AGC’s Macrina Wilkins noted that states benefiting from infrastructure, energy, manufacturing and data-center investment continue to lead hiring, while higher financing costs remain a headwind for private construction sectors. California is on the wrong side of that split. Tedmag
Workforce supply: ABC estimates the industry needs roughly 349,000 net new workers in 2026, rising to 456,000 in 2027. NAHB reports immigrants make up 34% of construction workers nationally, exceeding 60% in drywall, roofing and plastering trades, with immigrant participation approaching or surpassing 40% in California, Texas and Florida. A joint AGC/NCCER survey found 28% of construction firms experienced workforce disruptions tied to ICE activity within the prior six months; about 10% lost workers directly to enforcement actions or raid rumors, and another 20% said their subcontractors did. Constructionowners
The counterintuitive part: statewide job losses are not translating into easier hiring for skilled trades. We’re losing headcount from softening residential demand while the qualified journeyman pool stays tight. Expect wage floors to hold or rise even as the aggregate employment number falls.
Financing, Policy and Other Decision Factors
Interest rates. The 30-year fixed sits around 6.54%, up modestly from 6.48% a month ago but below the 6.77% of a year ago. The 10-year Treasury is at 4.55%, and the Federal Reserve has held its target range at 3.50%–3.75%. The FOMC meets July 28–29; a rate change is considered highly unlikely, but the tone of the statement can move bond markets. The PCE index releases July 31. NAHB does not expect the 30-year fixed to be consistently below 6% until the end of 2027; Wells Fargo projects 30-year averages of 6.26% in 2026 and 6.2% in 2027. Mortgage Daily + 2
New California laws now in force (effective July 1, 2026):
- SB 79 created the Transit-Oriented Housing Development program, overriding local zoning on density, height, parking minimums and use restrictions for qualifying housing projects near major transit stations across eight Bay Area and Southern California counties, with an affordable-unit requirement to access the override. Not directly applicable to most Central Coast work, but it will pull subcontractor capacity toward those metros. Bay Legal PC
- SB 779 raised the minimum fine for unlicensed work to $1,500, and set new minimums of $1,500 for the most serious violations and $500 for most other license law violations. Worth confirming every sub on our active jobs is current with CSLB. The Press Democrat
Still in effect from January 1: the 5% retention cap on private projects (SB 61), the standardized change-order dispute process (SB 440), expanded home-improvement contract disclosure (SB 517), and the 2025 Title 24 Building Standards Code.
LA rebuild — where the demand actually is. In the Palisades alone, 928 single-family rebuild permits had been issued through May 2026, with 15 homeowner rebuilds completed and 586 fire-zone lots sold since the fire. This continues to absorb Southern California labor and materials capacity, which is part of why statewide cost pressure persists despite soft demand elsewhere. Bensonconstructiongroup
Central Coast context. San Luis Obispo County has permitted 7,088 housing units and completed 5,575 between 2019 and 2024. At the halfway point of the current housing cycle, the county stands at 60.9% of its above-moderate-income permitting goal, 43.7% of moderate, 53.2% of low, and 17.5% of very-low income. Both the City and County of SLO hold Prohousing designations, and all city housing plans are in compliance. The above-moderate pace running well ahead of the affordable categories is the structural gap worth watching for anyone bidding public or subsidized work locally. ca
Bottom Line — Action Items
- Re-price tariff-exposed scopes this week. With a July 24 tariff date and a 2.0% single-month CCCI jump, any bid carrying firm metal or MEP-equipment pricing beyond 30 days is exposed. Use escalation language, not optimism.
- Budget 5–7% escalation for 2027 starts, and add a separate line for delivery fuel surcharges — diesel is doing real damage that doesn’t show up in the materials line.
- Lock skilled crews before locking the schedule. Statewide job losses are masking continued tightness in qualified trades. Confirm crew availability during precon, not at mobilization.
- Follow the multifamily. California’s 47.9% year-to-date multifamily permit growth is the single strongest demand signal in the state. Single-family remains the weak leg.
- Verify sub licensing status. SB 779 minimums are live as of July 1.
- Watch July 28–29. The FOMC tone will set financing conditions for our Q4 pipeline more than any single data release this quarter.
Sources
All data retrieved July 23, 2026. Verify against official releases before making commitments.
- U.S. Census Bureau / HUD, New Residential Construction, June 2026 (released July 17, 2026) — census.gov/construction/nrc
- Reuters via GV Wire, “US Single-Family Housing Starts, Building Permits Fall in June,” July 17, 2026
- NAHB Eye on Housing, “Single-Family Permitting Continued to Weaken Through May,” July 2026
- firsttuesday Journal, “California Residential Construction Starts,” May 2026
- AGC of America, “Construction Input Costs Remain Sharply Higher Than a Year Ago Despite June Decline,” July 15, 2026
- Engineering News-Record, “Construction Materials Prices Jump 2.6% in May,” June 11, 2026
- California Dept. of General Services, California Construction Cost Index (CCCI), 2026 table — dgs.ca.gov/RESD
- AGC of America / tEDmag, “Construction Employment Increases in 33 States and D.C.,” July 21, 2026
- AGC Data DIGest, June 15–23, 2026
- Associated Builders and Contractors, “Construction Backlog Indicator Slips, Contractors Remain Confident in June,” July 14, 2026
- Dodge Construction Network, “Dodge Momentum Index Slows 2% in June,” July 8, 2026
- Tax Credit Advisor, “2026 U.S. Construction Costs — Q2 Update,” April 2026
- ABC Carolinas, “Construction Material Costs 2026–2027: Tariff Transition Risks,” May 2026
- Construction Owners Association, “Construction Workforce Crisis Deepens in 2026,” April 2026
- Bay Legal PC, “2026 California Construction Law Update”; Press Democrat, “California Contractors: 7 Key Law Changes for 2026”
- Benson Construction Group, “Fire Rebuild Los Angeles: Costs, Permits & Timeline (2026)”
- Mortgage Daily, “Mortgage Rate Forecast: Week of July 20–24, 2026”; U.S. News, “Mortgage Rate Forecast,” July 2026
- California Accountability Dashboard, San Luis Obispo County housing metrics
This newsletter is for informational purposes only. Consult your financial, legal, and insurance advisors before making company-specific decisions.