While backlog and spending data show a contracting market, the forward-looking indicators moved the other way in July. The Dodge Momentum Index rose 6.9 percent to 291.7, and total construction starts jumped 25.6 percent to a seasonally adjusted annual rate of $1.79 trillion, according to Dodge Construction Network. Twenty-five projects valued at $1 billion or more broke ground in the month. That is not a normal distribution, and understanding why matters for anyone building a 2027 forecast.

Planning activity: the Momentum Index

The Dodge Momentum Index, a monthly measure of nonresidential building projects entering planning, grew to 291.7 from an upwardly revised June reading of 273.0, Dodge reported on August 6, 2026. Commercial planning expanded 4.1 percent and institutional planning grew 13.1 percent. Year over year the index was up 11.7 percent, with commercial up 13.8 percent and institutional up 7.6 percent.

The institutional breadth is the genuinely encouraging part. Education, healthcare, recreational, religious and public building planning all accelerated in July, with public building planning expanding more than 100 percent over two months, per Dodge. Meanwhile office, warehouse, retail and hotel planning slowed.

The commercial side remains a single story. Removing data centers, the commercial segment would be down 16.2 percent from year-ago levels, Dodge reported. A total of 59 projects valued at $100 million or more entered planning, and the largest commercial entries were three data centers: a $500 million campus in Petersburg, Virginia, the $500 million DFW20C Data Center in Fairfield, Texas, and a $500 million Google data center in Buffalo, West Virginia. The largest institutional entries were a $351 million Northwestern Memorial Hospital cancer center in Chicago, a $300 million BeOne Medicines research and development expansion in Pennington, New Jersey, and a $300 million Houston Livestock Show and Rodeo agricultural complex.

"Data centers and broad-based growth across key institutional sectors supported stronger planning activity in July," said Sarah Martin, Director of Economic Research at Dodge Construction Network. "Sustained planning activity should bolster construction in late 2027, though real growth will prove more constrained as inflationary expectations are priced into project costs." The index leads nonresidential building spending by a full year to 18 months, per Dodge.

Starts: a megaproject distortion

Total construction starts rose 25.6 percent in July to $1.79 trillion SAAR, with nonresidential building starts up 57.7 percent to $917 billion, residential up 4.9 percent to $386 billion, and nonbuilding up 2.2 percent to $485 billion, Dodge reported on August 20, 2026. Year to date through July, total starts were up 16.9 percent.

Read the project list before reading the percentage. The three largest nonresidential projects to break ground in July were the $12.8 billion data center portion of the Project Jupiter Data Center and Microgrid Phase 1 in Santa Teresa, New Mexico, the $12.0 billion Micron Semiconductor Mega-Factory Fab 1 Phase 1 in Clay, New York, and the $4.0 billion Amazon STACK Highway 3 Data Center in Benton, Louisiana, per Dodge. Those three alone account for roughly $29 billion in project value. Offices and data centers more than doubled month over month, up 107.9 percent, while hotels fell 51.5 percent, parking garages fell 19.4 percent and retail stores fell 9.5 percent. Healthcare facility starts fell another 59.7 percent.

"Megaproject driven volatility headlines a disjointed construction market," said Eric Gaus, Chief Economist at Dodge Construction Network. "There is strength in pockets, multifamily within residential, data centers within commercial, energy within non-building, but also verticals struggling to stabilize."

The nonbuilding detail is worth flagging separately. Utilities improved 44.7 percent month over month and are up 94.1 percent year to date, while highway and bridge starts fell 16.9 percent in July and environmental public works fell 7.8 percent, Dodge reported.

Why it matters for construction professionals

The apparent contradiction between rising planning and starts on one hand and falling backlog and spending on the other resolves cleanly once you separate scale.

• Megaprojects lift aggregate dollars without lifting most contractors' workload. A $12.8 billion data center and microgrid in New Mexico creates enormous work for a small number of qualified firms. It does nothing for a mid-size commercial contractor in Ohio, whose backlog is still 7.1 months per ABC's Middle states reading.
• The institutional signal is more broadly useful than the commercial one. Education, healthcare, recreational, religious and public building planning accelerating together suggests a genuine pipeline widening. That pipeline is bid by regional general contractors, not by hyperscale specialists.
• Planning-to-construction lag is 12 to 18 months. July 2026 planning activity translates into late 2027 construction. Firms should be positioning for institutional work now, which means prequalification, public-owner relationships and design-build teaming.

Implications for owners, developers, contractors and subcontractors

For owners, Martin's caveat is the operative one: planning activity is strong, but "real growth will prove more constrained as inflationary expectations are priced into project costs." Projects entering planning in 2026 for 2027 construction will be estimated with escalation assumptions embedded. Owners with fixed budgets set in 2025 should re-baseline now rather than at bid opening.

For contractors, the institutional acceleration is where mid-size firms should focus. Public buildings, K-12 and higher education, healthcare and recreational facilities are procured on qualifications and price in a way that regional firms can win. Getting into those bid pools requires being on approved lists before the projects hit the street.

For subcontractors, the divergence within nonbuilding matters. Utility and energy work is up 94.1 percent year to date while highway and bridge starts fell 16.9 percent in July. Electrical, high-voltage, substation and civil contractors who can serve utility-scale energy work have a materially better pipeline than those focused on paving and structures.

For firms in upstate New York specifically, the $12.0 billion Micron Fab 1 Phase 1 start in Clay is the single largest regional construction event in decades. Every trade in central and western New York will feel the labor market effect, whether or not they work on the site.

What to watch next

• Whether institutional planning growth persists in the August and September Momentum Index readings, published at Dodge's construction news page. Two more months of broad institutional gains would be a real signal.
• Data center planning momentum and whether local opposition begins showing up as withdrawn or delayed projects.
• Highway and bridge starts, which fell 16.9 percent in July amid federal funding uncertainty.
• Megaproject execution. Announced starts and sustained field activity are not the same thing, particularly on multi-billion-dollar phased programs.

Bottom line

July planning and starts data look strong and are strong, but not evenly. The Momentum Index at 291.7 and starts at $1.79 trillion SAAR were driven by data centers and a handful of multi-billion-dollar megaprojects, including $12.8 billion in New Mexico and $12.0 billion at Micron's Clay, New York fab. Strip out data centers and the commercial planning segment is down 16.2 percent year over year. The more durable good news is institutional: education, healthcare, recreational, religious and public building planning all accelerated in July, and that work is bid by regional contractors. With a 12 to 18 month lag, the firms positioning for institutional work this fall are the ones with 2027 backlog.

Sources

• Dodge Construction Network, "Dodge Momentum Index Improves 7% in July" — https://www.construction.com/dodge-momentum-index-improves-7-in-july/
• Dodge Construction Network, "Construction Starts Rebound 25.6% in July" — https://www.construction.com/construction-starts-rebound-july-2026/
• Dodge Construction Network, construction news index — https://www.construction.com/construction-news/
• Associated Builders and Contractors Construction Backlog Indicator regional readings, via Construction Executive — https://constructionexec.com/article/construction-futures-august-2026-economic-roundup/