NW Construction News Monthly Market Intelligence
July 2026 Edition
What’s Coming for Pacific Northwest Construction
THE SCORECARD — HOW JUNE’S PREDICTIONS ARE TRACKING
As promised, we’re opening every edition with an honest look back. Here’s where our six inaugural calls stand one month later.
Prediction 3 (Nonresidential Commercial) — Miss, and we’re moving the timeline out. We called an ABI recovery signal for Q3 2026 based on three straight months of rising inquiries. That didn’t hold. The May ABI fell to 44.5 — its lowest reading since January — and the inquiries index dropped below 50 for the first time in four months. AIA’s chief economist pointed to Iran-conflict uncertainty and higher energy costs as the drag. We’re pushing our commercial recovery call further out; see revised Prediction 3 below.
Prediction 4 (Public Works) — Confirmed, decisively. This was our highest-confidence call, and July delivered the proof: the Interstate Bridge Replacement Program received its Amended Record of Decision on July 1, clearing the federal environmental review and formally moving the program into procurement and permitting. That’s exactly the structural, funding-driven momentum we described.
Prediction 5 (Materials) — Confirmed on the metals side. We called continued steel and copper pressure as the bigger risk versus moderating lumber. May data backed that up hard: copper wire and cable up 24.2% year-over-year, aluminum mill shapes up 48.8%, steel mill products up 6.7%. Overall producer prices for construction materials and services rose 1.7% in May and 8.1% year-over-year — nearly 10% by ABC’s broader measure. We don’t yet have fresh lumber-specific data to confirm the moderation side of that call; we’ll track it in August.
Predictions 1 (Residential — Bend/Tri-Cities) and 6 (Workforce) — No new county-level data this cycle to confirm or deny. We’re not going to manufacture certainty we don’t have. Deschutes County and Tri-Cities permit data, and Oregon/Washington apprenticeship enrollment figures, weren’t refreshed in time for this edition. We’ll report on these with real numbers next month rather than guess.
Prediction 2 (Multifamily) — Needs a real caveat, not a miss yet. We called an Oregon mid-size-market multifamily surge driven by public funding rather than rate cycles. National multifamily starts just cratered 41.6% in May to their lowest level since November 2024. That’s a serious headwind. Our thesis was specifically that subsidized multifamily — Housing Trust Fund and SDC waiver projects — moves independently of that national market-rate collapse. May’s data doesn’t disprove that distinction, but it raises the stakes on whether it holds. More below.
THE DATA DASHBOARD — JULY 2026
AIA Architectural Billings Index (May 2026): 44.5
Business conditions at architecture firms weakened further in May, with the ABI declining to its lowest level since January. Firms across all specializations reported declining billings this month, and the value of newly signed design contracts weakened to its lowest level since January. AIA’s chief economist cited the Iran conflict and higher energy costs as headwinds. The West region, while not broken out in this release’s headline commentary, has been tracking behind the national average for most of the year — worth watching closely as June data drops.
What this means for NW contractors: The recovery signal we flagged last month has stalled. Nonresidential commercial backlog concerns should extend further into 2027, not resolve by mid-year as we’d originally modeled.
Housing Starts (May 2026): 1.177 Million SAAR
This is the headline number of the month, and it’s a rough one: privately-owned housing starts fell 15.4% to a seasonally adjusted annual rate of 1.177 million — the lowest level since May 2020, and well below the 1.43 million economists expected. Multifamily starts plunged 41.6% to 284,000. Single-family starts slipped a more modest 1.9% to 882,000. Regionally, the West fell 17.2% to 264,000, the Northeast dropped 26.8%, and the South declined 17.0% — only the Midwest posted a gain, up 3.7%.
What this means for NW contractors: High mortgage rates are curbing builder activity nationally, and the West is taking one of the sharper regional hits. Builders are reducing spec-home inventory and leaning on incentives rather than new starts. This is the clearest sign yet that market-rate residential and multifamily are both under real pressure — which sharpens the distinction we drew last month between that segment and publicly funded affordable multifamily.
Producer Price Index / Construction Materials (May 2026)
Final demand producer prices rose 1.1% in May and 6.5% over the trailing twelve months — the largest annual increase since November 2022. Materials specific to construction moved even more sharply: copper wire and cable rose 7.3% for the month and 24.2% year-over-year; iron and steel rose 1.4% monthly and 7.0% annually; aluminum mill shapes were up 48.8% year-over-year. ABC’s chief economist flagged oil prices tied to the Iran conflict and tariff-affected metals inputs as the driving forces, and noted contractor backlog rose to 8.8 months — the highest in ten months — largely on continued data center investment.
What this means for NW contractors: Materials escalation clauses remain essential on any bid extending past 60 days. Metals-heavy trades — mechanical, electrical, structural steel — are absorbing the sharpest cost pressure right now.
Pacific Northwest Milestone: I-5 Interstate Bridge Replacement Program
The Amended Record of Decision issued July 1 clears the program to move into procurement and permitting for a project now estimated at $14.4 billion for the full corridor scope, with governors Kotek and Ferguson opting to phase the work — prioritizing the bridge and light rail span first rather than the full five-mile freeway rebuild. Several major contract packages are slated to advertise in 2026 itself, including TriMet’s light rail track, system, and stations package ($190–290 million, CM/GC delivery) and the Hayden Island Guideway ($55–85 million, CM/GC delivery). The larger approach-structure package ($720 million–$1.1 billion) isn’t expected to advertise until 2027.
What this means for NW contractors: If you do heavy civil, structural, or transit-related work and aren’t yet prequalified with WSDOT, ODOT, or TriMet, this is the month to start that process — not when the ads post.
SIX PREDICTIONS FOR JULY 2026
PREDICTION 1 — RESIDENTIAL
West Region Underperformance Is Now a Regional Pattern, Not Noise
May’s 17.2% regional decline in West housing starts, layered onto a national collapse, tells us this isn’t a one-month blip. Mortgage rates, buyer hesitancy, and builder caution around spec inventory are compounding regionally.
Our Call: Expect Oregon and Washington single-family permit activity to underperform national averages through Q3 2026, with the exception of high-in-migration counties (Deschutes, Franklin) that are less rate-sensitive. We’ll confirm this with county-level data next edition.
Watch This: Oregon Housing and Community Services and Washington OFM monthly permit releases.
PREDICTION 2 — MULTIFAMILY
The Split Between Market-Rate and Subsidized Multifamily Is About to Become the Defining Story
National multifamily starts just fell off a cliff. But Oregon’s Housing Trust Fund and SDC waiver pipeline is money already committed, not money waiting on a rate cut.
Our Call: Market-rate multifamily starts in Oregon and Washington will track the grim national trend through Q3 2026. Subsidized and affordable multifamily projects tied to already-awarded Housing Trust Fund and SDC waiver dollars will continue moving from permitting to construction largely unaffected. Contractors should sort their multifamily pipeline by funding source, not just unit type, when forecasting Q3–Q4 workload.
Watch This: Oregon Housing and Community Services award announcements versus private multifamily permit filings — track them separately.
PREDICTION 3 — NONRESIDENTIAL COMMERCIAL (REVISED)
Push the Recovery Timeline to Late 2027
Last month we said a Q3 2026 ABI recovery signal would reach PNW commercial construction by mid-2027. May’s data broke that thesis — billings weakened further and inquiries reversed. The 9–12 month lag now points later.
Our Call: We’re revising our commercial recovery expectation to late 2027 at the earliest, contingent on the ABI sustaining readings above 50 for multiple consecutive months first. Continue planning conservatively; this is not the month to loosen up commercial backlog assumptions.
Watch This: The June ABI release, expected in late July — a second consecutive weak reading would extend this timeline further.
PREDICTION 4 — PUBLIC WORKS
The I-5 Bridge Procurement Window Opens Now, Not in 2027
With the Amended ROD signed, procurement planning begins immediately even though major packages advertise on a staggered timeline through 2029.
Our Call: GCs, civil contractors, and specialty trades (transit systems, structural, marine/river work) should begin prequalification and teaming conversations in Q3 2026 for the TriMet and Hayden Island packages advertising later this year. Waiting until an ad posts means starting from behind.
Watch This: interstatebridge.org/opportunities for updated advertisement dates.
PREDICTION 5 — MATERIALS
Metals Pressure Isn’t Peaking — It’s the New Baseline
Copper, aluminum, and steel increases tied to tariffs show no sign of the “temporary spike” pattern we might have hoped for a year ago. This now reads as a sustained cost environment, not a cycle.
Our Call: Budget metals-heavy trade costs assuming current elevated levels persist through year-end 2026, not as an anomaly that reverses. Escalation clauses on any contract with metals-heavy scope should reflect double-digit annual volatility, not the 3–5% assumptions common a few years ago.
Watch This: The June PPI report, releasing July 15 — the next data point on whether this trend is accelerating or stabilizing.
PREDICTION 6 — WORKFORCE
Data Center Demand Is Quietly Reshaping PNW Trade Labor Allocation
ABC’s national data shows contractor backlog rising to 8.8 months, driven largely by data center investment — a dynamic increasingly visible in PNW markets pulling electricians and mechanical trades away from other segments, compounding the public-works-versus-private competition we flagged last month.
Our Call: Electrical and mechanical subcontractor lead times will keep lengthening through Q3, with data center projects now competing directly with I-5 Bridge mobilization and public works for the same limited trade labor pool. GCs who haven’t locked in commitments face a tightening window.
Watch This: Oregon BOLI and Washington L&I apprenticeship enrollment data, still pending from last month’s request — we’ll have real numbers by August.
NEXT MONTH — WHAT WE’LL BE WATCHING
- July 15: BLS June 2026 PPI release
- July 17: Census Bureau June 2026 Housing Starts and Permits
- Late July: June ABI release from AIA
- July 24: AIA Economic Update Q3 2026 ABI Insights webinar (free)
- Ongoing: I-5 Bridge procurement advertisements — TriMet light rail and Hayden Island Guideway packages are the near-term ones to watch
The Predictive Pipeline is published monthly by NW Construction News. Data sources: AIA/Deltek Architecture Billings Index, U.S. Census Bureau New Residential Construction Report, U.S. Bureau of Labor Statistics Producer Price Index, Associated Builders and Contractors, Interstate Bridge Replacement Program. All analysis represents the editorial opinion of NW Construction News and does not constitute financial, investment, or legal advice.
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