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Construction input costs rise 7.4% while project backlog falls
Associated Builders and Contractors data show construction backlog slipped to eight months in July from 8.8 months in June, the steepest drop since early 2022.
Construction prices rose in July, with inputs up 7.4% versus a year earlier, reflecting mounting cost pressure for contractors, according to an Associated Builders and Contractors analysis of Bureau of Labor Statistics data cited by Bisnow.
Material costs accelerated across multiple categories, including iron and steel up 2.4% in July and 17.6% year over year, copper wire up 17.9% from last year, and softwood lumber jumping 6.4% last month. Bisnow also linked part of July’s month-over-month increase to lower crude oil prices, which fell 12% from June, noting that any relief may be limited as Brent crude has risen more than 5% since early August and natural gas rose 10% in July.
The industry faces weaker demand signals alongside higher prices. ABC’s measure of construction backlog fell nearly a full month in July to eight months from 8.8 months in June, the steepest decline since early 2022, with Wells Fargo and JLL pointing to continued unevenness across commercial real estate segments.
ABC Chief Economist Anirban Basu said the data center boom is masking broader weakness and that the slowdown is especially difficult for small and mid-size contractors. Backlog for firms in data center work was more than 11 months, while contractors that do not build server farms, 88% of ABC’s membership, had a 7.5-month backlog, underscoring how the construction outlook for much of the sector has turned cloudier.
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