May construction numbers show a building market moving in two directions

By Heidi J. Ellsworth.

Residential softness, nonresidential strength and cost pressure are creating a complicated outlook for roofing contractors. 

The May construction numbers tell a story that roofing contractors should be watching closely. On one side of the market, residential construction continues to feel the weight of affordability challenges, elevated mortgage rates and cautious buyers. On the other side, non-residential work is showing strength, especially in areas like data centers, healthcare, manufacturing, utilities and infrastructure. For roofing, that means opportunity is still out there, but it may not look the same across every market, every contractor or every segment of the industry.

According to National Roofing Contractors Association (NRCA) reporting on Associated Builders and Contractors data, construction industry leaders were less optimistic in May even though confidence remained above the threshold that indicates expectations for growth. ABC’s Construction Confidence Index fell in all three categories during May, with staff expectations dropping from 65.5 to 61.3, profit margin expectations falling from 54.9 to 52.5 and sales expectations declining from 66.2 to 61.1. At the same time, ABC’s Construction Backlog Indicator increased from 8.8 months in April to 9.1 months in May and was up 0.7 months compared with May 2025.

That combination — lower confidence but higher backlog — is important. It suggests contractors are still busy, but they are also feeling pressured. ABC Chief Economist Anirban Basu said the increase in backlog largely reflects major data center investments across the country, noting that the 14% of ABC members under contract to work on data centers had much higher backlog at 11.6 months compared with 8.6 months for those not working on data centers. For roofing contractors, this reinforces a key reality of today’s market: growth is not evenly distributed. Contractors tied into large-scale commercial, industrial or specialty work may be seeing strong demand, while others may be facing tighter margins, slower decisions and more competitive bidding.

The residential side of the market continues to be more challenging. The U.S. Census Bureau and U.S. Department of Housing and Urban Development reported that privately owned housing starts in May were at a seasonally adjusted annual rate of 1,177,000, down 15.4% from the revised April estimate and down 8.7% from May 2025. Single-family starts were at a rate of 882,000, down 1.9% from April, while May housing completions were down 8.1% from April and 14.2% from May 2025. Thesenumbers matter to roofing because new residential construction directly affects demand for new roof installations, while slower completions can ripple through builders, suppliers, distributors and trade partners.

Builder confidence is also sending warning signals. The National Association of Home Builders reported that builder confidence in the market for newly built single-family homes fell two points to 35 in June, marking the 14th consecutive month that sentiment remained below 40. NAHB also reported that 35% of builders cut prices in June, up from 32% in May, and 62% were using sales incentives other than price cuts, up from 61% in May. NRCA highlighted the same numbers, noting that anything below 50 is considered negative in the NAHB/Wells Fargo Housing Market Index and that builder sentiment dropped amid rising construction material costs and elevated mortgage rates. 

For roofing contractors serving the residential market, this does not necessarily mean demand disappears. Roof replacement, repair, insurance restoration and service work continue to move based on roof age, weather, homeowner need and property maintenance. But it does mean contractors may need to pay closer attention to homeowners' sensitivity around pricing, financing and project timing. When builders are offering incentives and cutting prices, consumers become more aware of deals and negotiations. Roofing contractors may need to communicate value more clearly, especially around durability, ventilation, energy performance, warranties and long-term protection of the home. 

The broader building industry is also showing signs of strength, but much of that strength is concentrated in large nonresidential and infrastructure projects. Dodge Construction Network reported that total construction starts improved 34.1% in May to a seasonally adjusted annual rate of $1.78 trillion. Nonresidential building starts grew 17.8%, nonbuilding starts increased 91.9% and residential starts fell 2.1% over the month. On a year-to-date basis through May, total construction starts were up 12.7%, with non-residential starts up 12.3%, nonbuilding starts up 32.9% and residential starts down 4.9%. 

That is a clear reminder that the building industry is not moving as one market. Dodge reported that megaproject starts in healthcare, manufacturing, utilities and data centers drove sizable gains in May, while pockets of weakness remained in institutional construction, warehouses and residential construction. This unevenness affects roofing in very practical ways. Commercial roofing contractors may see opportunities tied to healthcare campuses, manufacturing facilities, energy projects, public work and data centers, while residential-focused companies may see a slower new construction pipeline. Distributors and manufacturers are navigating this split, balancing inventory and demand across steep-slope, low-slope, metal, coatingsand specialty systems. 

Labor adds another layer to the picture. The NRCA reported that construction employment added 17,000 jobs in May, according to Associated Builders and Contractors, while nonresidential construction added 15,700 jobs with gains in all three subsectors. Non-residential specialty trade contractors added 11,400 jobs, heavy and civil engineering added 2,600 jobs and nonresidential building added 1,700 jobs. More construction jobs are good for the overall economy, but they also increase competition for skilled labor. Roofing contractors already dealing with workforce challenges may find themselves competing not just with other roofers, but with the broader construction market for crew members, foremen, estimators, project managers and service technicians. 

Material costs are another concern. The Associated General Contractors of America reported that input prices for new nonresidential construction rose 1.8% in May and 8.4% year over year, far outpacing the 3.5% year-over-year increase in what contractors said they would charge for new nonresidential building construction. The same report noted significant increases in diesel, aluminum, copper, brass and structural steel, and said construction respondents reported higher prices for items including construction materials, HVAC equipment, roofing materials and steel products. For roofing, this points directly to margin pressure. Even when backlog is strong, contractors can struggle if material, fuel, freight and labor costs move faster than pricing. 

The path forward is not all negative. The same May numbers show that demand still exists, especially in non-residential, infrastructure and specialized building sectors. Dodge Construction Network reported that nonresidential starts were up 12.3% year to date through May, commercial and industrial construction gained 32.9% and manufacturing starts rebounded 116.1% month over month in May. For roofing companies that can diversify across service, maintenance, reroofing, restoration, metal, coatings, commercial replacement or public work, the current market may create opportunities to stabilize revenue even when one segment slows. 

The takeaway for roofing professionals is that May’s construction numbers are less about a single up-or-down market and more about a market that is shifting. Residential construction is under pressure. Nonresidential work is being lifted by large projects, but not every contractor has access to those opportunities. Backlog remains encouraging, but confidence is slipping. Jobs are being added, but labor remains competitive. Material costs are increasing, but customers are still watching pricescarefully. 

For roofing contractors, now is the time to stay close to the numbers, understand the sectors driving work in their region and protect margins through disciplined estimating, strong purchasing relationships and proactive communication with customers. The building industry is still moving, but it is moving unevenly. Roofing companies that understand where the momentum is — and where the pressure points are — will be better positioned to adapt. 

Source note: This article draws from NRCA coverage of contractor confidence, employment market and homebuilder sentiment, U.S. Census Bureau May residential construction data, Dodge Construction Network May construction starts data, National Association of Home Builders builder sentiment reporting and Associated General Contractors of America reporting on May construction input prices.