Q1 Construction Part One: Indicators point to concentrated Q2 strength

Associated Builder and Contractors’ Construction Backlog Indicator

The Associated Builders and Contractors’ Construction Backlog Indicator (CBI) strengthened through the end of Q1’26 and continued increasing into April.

The headline CBI ended March at 8.6 months before rising to 8.8 months in April, slightly above April 2025’s reading of 8.7 months. January and February 2026 backlog indexes were shorter than the prior year before turning modestly positive in March and April, suggesting backlog conditions strengthened later in the period rather than deteriorating consistently throughout the quarter.

When separated by commercial/institutional, heavy industrial and infrastructure categories, backlog readings remained uneven. Commercial and institutional backlog ended April at 8.9 months, slightly below April 2025’s reading of 9.1 months, while the heavy industrial backlog index rose sharply year over year to 9.1 months from 5.9 months. Meanwhile, infrastructure backlog increased to 9.9 months from 7.0 months.

The widening gap between categories signals that much of the broader backlog increase remained concentrated in industrial and infrastructure-related activity rather than commercial expansion.

Although the southern US retained the longest backlog throughout Q1’26, similar to Q1’25, southern backlog still declined year over year during the first quarter. Meanwhile, the West, Middle States and Northeast all posted higher March readings than the previous year.

The April backlog for the Middle States region was flat year over year at 7.2 months, while the Northeast backlog edged lower to 8.5 months from 8.7 months in April 2025. Southern backlog increased to 10.7 months from 10.3 months, while Western backlog rose to 7.5 months from 7.1 months.

A first-quarter disparity between large and small contractors throughout the first quarter widened further by April. Contractors with annual revenue above $100 million reported backlog of 14.2 months compared with 12 months in April 2025. Conversely, backlog for firms below $30 million declined year over year to 7.3 months from 7.8 months.

ABC stated 42% of contractors above $100 million in annual revenue were under contract to work on data center projects compared with just 7% of contractors below that revenue threshold. Contractors working on data center projects also reported substantially longer backlogs at 12.2 months compared with 8.3 months for contractors without data center work.

Contractors with annual revenue between $30 million and $50 million also remained below prior-year levels at 8.8 months, while backlogs for firms between $50 million and $100 million declined to 9.1 months from 9.7 months.

The contractor-size and data center caveats indicate much of the backlog expansion remained concentrated among very large firms participating in data center, infrastructure and other megaproject-related work.

Dodge Construction Network’s Dodge Momentum Index

The broader Dodge Momentum Index (DMI), along with the commercial and institutional building subcategories, increased by an average of roughly 20% year over year through the first four months of 2026.

January, March and April each posted double-digit year-over-year increases, while February rose by nearly 6%.

The DMI averaged 256.2 through the first quarter, up from 217.5 during Q1 2025, before reaching 264.2 in April, nearly 29% above the prior-year level.

Commercial planning increased roughly 21% year over year during the first four months of 2026, heavily influenced by data center projects. However, in March, commercial planning increased 28.5% year over year but declined 12.7% when data centers were excluded. Similarly, April commercial planning rose 37.2% year over year, but only 5.8% excluding data centers. Data center project planning comprising the a significantly larger share of commercial projects entering planning was a consistent pattern throughout each of the four months of reported data.

The concentration of backlog growth among very large contractors aligns closely with the concentration of planning activity in large-scale data center and utility-related projects. That overlap became more pronounced in April after ABC reported that contractors involved in data center construction carried materially longer backlog than firms without data center exposure.

Institutional DMI readings also remained above prior-year levels throughout January through April. However, the largest institutional projects generally carried lower dollar values than the largest commercial projects.

Dodge Construction Network’s Construction Starts

Dodge Construction Network’s construction starts tended to vary month to month in the first quarter.

Non-residential building starts averaged an approximate 9% year-over-year increase during Q1 2026, while nonbuilding construction averaged an increase of roughly 12.5%. Residential construction starts, meanwhile, averaged a decline of nearly 6% year over year during the quarter.

That said, monthly year-over-year swings were more volatile than those averages suggest.

Non-building construction starts rose nearly 55% in January from the prior year before contracting by roughly 19% in February. A sharp increase in electric power and utility starts in January drove much of the increase in nonbuilding construction starts, partially offset by a double-digit decline in highway and bridge starts. Highway and bridge subsequently rebounded in February as electric power and utility activity normalized.

Several monthly movements in construction starts were driven by a limited number of large projects, consistent with some of feedback on both the CBI and DMI.

January non-building growth depended heavily on energy-related megaprojects, while February’s decline followed normalization in electric power and utility starts after January’s surge. Because Dodge reports projects by dollar value, a relatively small number of projects materially influenced headline readings.

Non-residential building starts increased in both February and March by roughly 16% year over year following a modest contraction of slightly less than 4% in January.

Dodge publicly reports month-over-month percentage changes in several subsectors. As a result, outright dollar comparisons and year-over-year movements within some subsectors are more difficult to track directly.

Data center activity likely accounted for a significant share of the increase in commercial construction starts, while electric power and utility projects also contributed to growth in the nonbuilding category.

While office and data center starts fell more than 52% month over month in January, February’s roughly 160% increase likely offset much of that decline in nominal dollar figures.

Commercial non-residential construction starts averaged roughly 9% year-over-year growth during Q1 2026. At the same time, the largest commercial projects entering planning throughout the quarter were consistently data centers.

DMI leads future construction activity by roughly 12 to 18 months, therefore the concentration of large data center projects within both planning activity and construction starts suggests a meaningful share of current and future non-residential activity remains concentrated within that market segment.

American Institute of Architects’ Architectural Billings Index

Architectural Billings Index figures showed the least consistency through the first quarter when juxtaposing the broad reading with the figures segmented by industry and region.

The overall ABI reading ended March at 49.8, up nearly 13% from March 2025 and the closest the index has come to expansion since the first quarter of 2023.

An index score above 50 represents an increase in firm billings, while a figure below 50 reflects a decline. An index score of 50 signifies no change in billings.

February’s ABI reading increased roughly 8.5% from February 2025, while March rose nearly 13% year over year following a modest decline in January.

Despite these dynamics, the value of newly signed design contracts declined for the 25th consecutive month in March, and the pace of decline accelerated from February. That divergence suggests firms continued working through existing project pipelines faster than new work entered them.

All ABI readings separated by industry moved above the expansion threshold by the end of March despite the broader index remaining below 50.

Commercial/industrial, multifamily residential and institutional ABI readings all entered expansion territory by the end of the quarter.

By region, the Midwest, Northeast and Southern US readings ranged from flat to roughly 9% year-over-year increases during the quarter. Western US readings ranged from a 5% year-over-year decline in January to a nearly 18% increase in March.

Trend-wise, the Midwest and Northeast never moved above the billings expansion threshold through January and March. Meanwhile, the Southern US entered 2026 with billings expansion, registered no change in February and moved below 50 in March. The West entered 2026 in contraction territory before rising to 50.6 in March, the region’s first expansion reading since December 2024.

Follow over to Part 2, where the Census construction spending data is explored in detail and the broader narrative across spending, backlog, and planning is tied into a construction outlook.