Construction prices have continued on their upward march, rising in July as the backlog for new projects dropped sharply.

Material prices for construction inputs are up 7.4% from this point last year after rising another 10th of a percentage point in July, according to an Associated Builders and Contractors analysis of Bureau of Labor Statistics data. 

The nominal month-over-month increase was largely attributable to the decline in crude oil prices, which fell 12% from June. But that relief will likely be short-lived — the Brent crude oil index is up more than 5% since the beginning of August. Natural gas shot up 10% in July.

Other critical inputs to building continue to steeply increase. Iron and steel prices rose 2.4% in July and are up 17.6% year-over-year, while copper wire is up 17.9% from last year after a 20-basis-point monthly increase, and softwood lumber prices jumped 6.4% last month, according to the ABC.

As inflation and a renewed tariff effort continue to hit the construction industry, the future business outlook is looking cloudier. ABC's measure of firms' construction backlog plummeted nearly a full month in July to eight months from 8.8 months in June, the steepest drop since early 2022.

“The data center boom masks the depth of this weakness, as there is a lack of momentum in any other segment,” ABC Chief Economist Anirban Basu said in a statement. “This dynamic has been particularly difficult for small and mid-size contractors. Backlog in the $30-$50 million annual revenue category, for instance, fell to the lowest level since March 2020.”

Backlogs for firms engaged in data center work were more than 11 months long, while those that don't build server farms — 88% of contractors in ABC's membership — had a 7.5-month backlog.

More hurdles are being thrown up to data center construction, threatening the only segment of commercial real estate seeing a noticeable uptick in construction. Other sectors are building at roughly the same pace they were when emerging from the Great Recession in 2013, Wells Fargo economists wrote this week.

Multifamily starts hit a 15-year low in the first quarter. Office construction has slightly ticked up this year but “remains extremely depressed by historical standards” after setting record lows in 2024 and 2025, according to JLL.

A majority of construction executives still expect sales and staffing levels to grow over the next six months, although 66% of contractors expect profit margins to stay flat or shrink, according to ABC's monthly survey of contractor confidence.