US Construction Sector NAICS 23

Jul 6, 2026 - Construction Industry Confidence Holds Steady in Q2

• Construction industry confidence held steady in the second quarter, with Engineering News-Record's (ENR) Construction Industry Confidence Index remaining at 54 and its Economic Index staying at 48 for a third consecutive quarter. Index readings of 50 or more suggest a healthy industry. Executives reported weaker views of the current market but slightly improved expectations for the next 12 to 18 months. General contractors and construction managers were the most confident, while design firms improved and subcontractors slipped. Larger firms remained more optimistic than smaller ones. More than 75% of ENR respondents reported upward price pressure. Industry watchers suggest inflation, higher rate expectations, and materials costs are weighing on contractors, though strong demand, especially for data centers, continues to support the market.
• New single-family home sales fell 7.3% month-over-month and were down 6.8% year-over-year in May 2026, according to the US Census Bureau. May’s total new home sales reached 580,000 units. Increased inflation, high mortgage rates, and economic uncertainty are keeping many would-be buyers on the sidelines, according to the National Association of Home Builders (NAHB). As new home sales soften further, stockpiles of completed homes continue to stack up. Inventories of unsold new homes reached 496,000 units in May, up 2.3% compared to April, but down 1.4% from May 2025. The months' supply of new homes was 10.3 months in May. The US housing market is generally considered balanced with five to six months of inventory.

• The Associated Builders and Contractors (ABC) Construction Backlog Indicator rose by 0.3 months to 9.1 months in May 2026 compared to April. The infrastructure backlog increased by 0.2 months to 10.1 months in May from the previous month, and the heavy industrial backlog rose by 0.9 months to 10 months over the same period. May’s commercial and institutional construction backlog decreased 0.1 months to 8.8 months compared to April. The ABC’s Construction Confidence Index for sales fell to 61.1 in May from 66.2 in April. A Confidence Index sales reading of 50 or more indicates most contractors are optimistic about sales. ABC Chief Economist Anirban Basu said that while May backlogs reached nearly a three-year high, backlog growth is increasingly concentrated among large contractors working on data centers. The drop in contractor confidence in May, despite the overall increase in the backlog index, highlights the disproportionate benefits of data center growth for larger contractors.
• Fitch Ratings lowered its 2026 outlooks for US homebuilding and North American building products to deteriorating, citing weak affordability, mortgage rates near 6.5%, soft consumer sentiment, and slower housing turnover. Fitch expects new home sales to fall 2.5% in 2026, single-family starts to decline 4.5%, and remodeling demand to remain constrained, especially for big-ticket discretionary projects. The slowdown could reduce demand for new construction, renovations, and resale-driven upgrades in the hardware, plumbing, and HVAC equipment markets. However, repair, maintenance, and nondiscretionary categories, including plumbing repair, roofing repair, coatings, HVAC replacement parts, and essential equipment, should prove more resilient. Distributors may face lower volumes, margin pressure from inflation, and cautious customer spending, partly offset by nonresidential activity in data centers and power infrastructure.