California Construction Sector Newsletter

Date: February 19, 2026 Edition: Special Update – Past 7 Days Focus (February 12–19, 2026) with Recent Trends

Welcome to this custom newsletter summarizing the latest insights for California construction company owners and operators. This covers building permits, construction starts, material and labor costs, plus other key factors for financial decisions like bidding, budgeting, and risk management. Data draws from recent industry reports, government releases, and news sources via Grok’s web lookups (primarily JM Construction updates, U.S. Census Bureau, Construction Dive, Associated Builders and Contractors (ABC), and local/state announcements).

Building Permits – Recent Activity (Past 7 Days)

No major statewide breaking news or sharp shifts in the past week. Activity remains routine at the local level:

• Counties and cities (e.g., Contra Costa, Ventura, Capitola, Placer, Mendocino, Fairfax) continue publishing January and early February 2026 permit lists, showing steady but not surging issuances for residential, commercial, and repairs.
• A notable bright spot: Wildfire rebuilding in affected areas (e.g., LA region) accelerated, with over 3,100–3,170 permits issued by early February (out of ~6,600 applications) at rates ~3x faster than pre-fire norms, thanks to executive orders suspending CEQA/Coastal Act rules and federal support for expedited processes.

Trends from Previous 2–3 Months (Late 2025 into Early 2026): Residential permits remained soft, lagging ~16% below historical averages through late 2025 (e.g., Sept–Nov periods). Statewide housing permits hit lows in 2025 (~49,400 units in first half). Single-family permits weak nationally (influencing CA), with some metro declines (e.g., San Jose area steep drops). Multifamily showed relative strength but overall residential below peaks. Expect continued softness in general housing, but pockets of opportunity in rebuilding and infrastructure/nonresidential.

Financial Implication: Monitor local municipal reports closely for opportunities; wildfire recovery creates targeted residential demand. Include buffers for delays in non-emergency areas.

Construction Starts – Recent Activity (Past 7 Days)

Limited new statewide data released in the past week; no major announcements on broad surges or drops. Some cooling noted in multifamily/apartment starts in high-supply markets (per early 2026 insights). Nonresidential/infrastructure remains a driver (e.g., megaprojects like healthcare towers and bridges).

Trends from Previous 2–3 Months: Residential mixed: Single-family starts down ~13.3% YoY (six months ending Aug 2025: ~28,633 units), with full-2025 forecasts ~6.6% drop. Multifamily up ~16.7% (~23,325 units), reflecting density policies. Overall residential subdued into 2026 due to high rates, lending tightness, and tariffs. Pacific region spending projected +1.7% in 2026 (~$303B), led by healthcare, power, and infrastructure. Recent examples: McCarthy topped out $3.7B UC Davis Health tower (Feb 6); Skanska JV awarded $534M LA bridge deck replacement (announced mid-Feb).

Financial Implication: Shift focus to nonresidential/infrastructure for steadier pipelines; residential remains challenging but rebuilding offers niches.

Material Cost Increases/Decreases – Recent Activity (Past 7 Days)

No dramatic weekly spikes reported, but ongoing volatility from tariff discussions (e.g., lumber, steel, metals from Canada/Mexico/China). Some stabilization signals persist.

Trends from Previous 2–3 Months: California Construction Cost Index (CCCI) eased in late 2025 (Oct: 10,418 → Dec: 10,258, ~1.5% decline), but national inputs up ~2.8% YoY (nonresidential +3.2%). Key pressures: Copper/steel volatility (15–40% spikes in spots), electrical/plumbing (20–35% higher), lumber risks from imports. Materials remain 25–28% above pre-2020 levels. Overall escalation 4–5% annually (potentially 6–8% with tariffs). Recent reports note a “rally” in inputs in late 2025 after stability, with nonresidential inflation ~4.4%, residential ~5%.

Financial Implication: Budget 5–10% buffers in 2026 bids, especially metals/lumber. Lock in supplier contracts early and add escalation clauses to protect margins.

Labor Increases/Decreases – Recent Activity (Past 7 Days)

No broad shifts; chronic shortages continue, especially skilled trades. Some localized actions (e.g., CSU skilled trade workers strike over promised raises).

Trends from Previous 2–3 Months: National need for ~349,000 net new workers in 2026 (down from prior years due to modest spending growth and retirements), but California feels acute pressures (e.g., ~439k gap noted in some reports). Wages rising: Baseline 4–5% annual inflation, with 4–6% common in tight areas; field craft averages ~$36–39/hour. Shortages drive faster wage growth than materials in some segments. Immigration policies may further constrain supply.

Financial Implication: Expect 4–6%+ upward pressure; invest in training/recruitment/retention. Factor in higher insurance in fire-prone areas.

Other Key Information for Financial Decisions

• Regulatory/Policy Notes: New 2026 Title 24 codes effective Jan; push for modular/factory-built housing (e.g., legislative hearings on “housing construction innovation”). High-speed rail and infrastructure bills signal potential federal boosts.
• Risks/Opportunities: Tariffs add uncertainty (5–10% direct cost hikes possible); immigration enforcement impacts labor availability (e.g., construction hit hard in LA). Nonresidential (healthcare, bridges, data centers) stronger; residential soft but rebuilding accelerated.
• Overall Outlook: Modest growth in Pacific region; prepare for elevated costs (total project escalation 6–10% realistic) and labor constraints. Confidence mixed—backlogs at 4-year lows nationally, but some optimism for own prospects.

Sources: JM Construction weekly reports (February 2026 updates), U.S. Census Bureau (New Residential Construction), Construction Dive (Feb 12–19 articles), Associated Builders and Contractors (ABC) reports, DGS California Construction Cost Index, local county/city permit archives, and related news (e.g., Reuters, LA Times).

This is a snapshot—monitor ongoing releases (e.g., Census data expected late Feb). For tailored advice, consult local experts or your financial team. Stay building smart! 🚧