Construction Backlog Drops to Lowest Level Since January

Industry Pulse News Desk · 2026-08-12

Growth in data center projects masked broader weakness in contractor bookings during July as the national construction backlog declined.

The commercial construction backlog dropped significantly in July to reach its lowest level since January, driven by widespread reductions in new project commitments across the nation.

Robust growth in the data center construction sector provided a temporary cushion, masking broader weakness in overall contractor bookings. Excluding data center developments, commercial and industrial project activity experienced a much steeper decline as high interest rates and tightening credit conditions continued to weigh on prospective developers.

Anirban Basu, chief economist at Associated Builders and Contractors, stated that strong demand for data center construction obscured the depth of weakness in contractor bookings throughout the month. Basu noted that financing hurdles are increasingly forcing property owners to delay or cancel planned projects.

Regional sentiment among contractors reflected growing concern regarding pipeline sustainability. While public infrastructure projects funded by federal programs continue to move forward, private nonresidential construction demand has slowed substantially in recent months.

Despite the shrinkage in backlog length, contractor confidence metrics for sales and staffing expectations remained slightly positive. However, industry representatives caution that lingering inflation and sustained borrowing costs may further compress profit margins and reduce project volume through the remainder of the year.