As a leading DVBE contractor in Signal Hill and SDVOSB construction company in California, Orr Construction is committed to keeping our clients informed about the evolving landscape of residential and public works construction. With over 150 projects completed in Signal Hill, Long Beach, Los Alamitos, and Orange County, we’re your trusted partner for additions, remodels, ADUs, new construction, and public works projects. In this week’s blog, we dive into the current climate of California’s construction industry, sharing 2025 statistics, average material costs, and insights to help you plan your next project—whether it’s a kitchen remodel in Long Beach or a public works contract in Los Angeles.
The 2025 Construction Climate in California
California’s construction sector is a tale of resilience and challenges in 2025. Despite economic headwinds, construction spending is up 6.2% year-to-date compared to 2024, driven by robust public works and nonresidential projects, according to Construction Analytics. However, residential construction faces hurdles, with single-family home (SFR) starts projected to decline slightly due to high interest rates (7–8% for construction loans) and material cost volatility. Multi-family starts are also flat, impacted by tight lending and labor shortages, per firsttuesday Journal.
Public works construction, a cornerstone of our expertise as a public works contractor in California, is a bright spot. Federal and state investments in infrastructure—bolstered by the 2021 Infrastructure Investment and Jobs Act—are fueling demand for projects like road repairs, bridges, and municipal buildings. As a veteran-owned contractor in California, Orr Construction leverages our DVBE and SDVOSB certifications to secure these contracts, delivering high-quality work for government agencies in Signal Hill and beyond.
Meanwhile, residential construction (e.g., ADU contractor Signal Hill, home addition contractor Long Beach) is driven by California’s housing crisis. ADU demand remains strong due to zoning reforms (e.g., SB 9), with homeowners adding units to boost property value or rental income. Remodels, especially kitchen remodel contractor Signal Hill and bathroom remodel contractor Long Beach, are also popular, as homeowners opt to upgrade rather than buy in a high-cost market (average home price in Long Beach: $850,000).
Current Statistics: Residential and Public Works Construction
Here’s a snapshot of California’s construction landscape in April 2025, based on the latest data:
- Construction Spending: Total construction spending is projected to grow 3.4% in 2025, with nonresidential (including public works) up 4.3% and residential up 2.9% (Construction Analytics, Nov 2024).
- Residential Starts: SFR starts are down 2–3% from 2024, with 21,236 multi-family starts in the six months ending Feb 2023 (20% lower than 2022), per firsttuesday Journal.
- Public Works Growth: Nonresidential construction spending rose 26% year-over-year in early 2024 ($67.6B vs. $53.5B in 2023), driven by education and infrastructure projects (Mortenson Q1 2024).
- Labor Shortages: The industry needs 450,000–550,000 new workers in 2025 to meet demand, with hiring difficulties reported by 80% of contractors (Associated General Contractors, 2024).
- Material Cost Inflation: Construction material costs are up 4.7% for residential and 4.0% for nonresidential projects in 2025, per Construction Analytics.
These trends highlight opportunities for new construction contractor Signal Hill projects and challenges like labor and cost management, which Orr Construction navigates with over 20 years of experience.
Average Construction Material Costs in California (2025)
Material costs remain a critical factor for both residential and public works projects. Based on CoreLogic’s January 2025 Construction Cost Update and other sources, here’s a breakdown of average costs for key materials in California:
- Lumber: $600–$800 per 1,000 board feet, stable in 2024 but volatile due to potential tariffs and housing demand (inFlow Inventory, 2025). Expect 5–10% fluctuations in 2025.
- Steel (rebar, structural): $0.90–$1.20 per pound, up 5% from 2024 due to tariff threats on Chinese steel and post-wildfire rebuilding in Los Angeles (agmetalminer, 2025).
- Concrete: $150–$200 per cubic yard, up 7% due to reduced availability and high demand for public works (scharconstruction, 2023).
- Drywall: $2–$3 per square foot, up 10% from 2024 due to supply chain constraints (scharconstruction, 2023).
- Copper (electrical wiring): $4–$5 per pound, elevated 8% due to global supply issues and demand for electrical components in ADUs and public works (inFlow Inventory, 2025).
- Siding (vinyl, stucco): $5–$12 per square foot, varying by material, with stucco popular in California for durability (realestateskills, 2024).
Total Material Costs: For a 3,000 sqft home in California, material costs average $50–$70 per square foot, or $150,000–$210,000, excluding labor and soft costs (houzeo, 2025). Public works projects (e.g., roads, bridges) see similar material cost pressures, with steel and concrete driving budgets.
Regional Note: In Signal Hill and Long Beach, costs are 10–15% higher than the state average due to urban demand and logistics (e.g., port proximity increases steel transport costs). Wildfires in Los Angeles (Nov 2024) have spiked local demand for steel and lumber, pushing prices up 5–10% (agmetalminer, 2025).
Challenges and Opportunities in 2025
Challenges
- Material Cost Volatility: Tariffs proposed by the Trump administration (effective 2025) could raise steel and aluminum prices by 10–20%, impacting budgets for public works construction Signal Hill and residential projects (inFlow Inventory, 2025).
- Labor Shortages: With 80% of contractors struggling to hire, labor costs are up 4.7% (BCIS, Q1 2025). This affects remodeling contractor Signal Hill timelines, as skilled carpenters and electricians are scarce.
- Liquidity Pressures: Slow client payments (60–90 days for public works) and retainage (5–10%) strain cash flow, a concern for small businesses like ours (Current Ratio 0.5, per your financials).
Opportunities
- ADU Boom: California’s zoning laws make ADUs a high-margin opportunity (15–45% margins). As an ADU builder Orange County and Signal Hill expert, we’ve built units in Huntington Beach and Cypress, adding $100,000–$200,000 in property value.
- Public Works Contracts: Federal funding for infrastructure supports DVBE construction Los Angeles projects. Our DVBE/SDVOSB status gives us a competitive edge in securing $500,000–$2M contracts.
- Remodel Demand: With home prices high, home renovation contractor Los Alamitos and Long Beach clients are investing in remodels (e.g., $50,000–$150,000 kitchen upgrades) over moving.
How Orr Construction Can Help
At Orr Construction, we combine 20+ years of experience with cutting-edge tools to deliver cost-effective, high-quality projects. Here’s how we address 2025’s challenges:
- Cost Management: We use job costing software (Buildertrend) to track material prices in real-time, preventing overruns. Our new construction contractor Signal Hill team negotiates bulk discounts on lumber and concrete, saving clients 5–10%.
- DVBE/SDVOSB Expertise: As a veteran-owned contractor in California, we streamline public works bids, ensuring compliance and competitive pricing for projects like school renovations or road upgrades.
- ADU and Remodel Specialists: Our ADU contractor Signal Hill and kitchen remodel contractor Signal Hill services deliver turnkey solutions, from permits to finishes, with transparent budgets (e.g., $80,000–$150,000 for a 500 sqft ADU).
- Local Knowledge: Based in Signal Hill, we understand Long Beach and Orange County’s building codes and market trends, ensuring projects like bathroom remodel contractor Long Beach stay on time and budget.
Plan Your 2025 Project with Orr Construction
Whether you’re dreaming of a home addition contractor Long Beach project, an ADU in Orange County, or a public works contract, 2025 is a year of opportunity despite challenges. Construction material costs are rising (4–7% for lumber, steel, concrete), but strategic planning can keep your project affordable. Public works construction benefits from federal funding, and residential demand for ADUs and remodels remains strong.
Ready to start? Contact Orr Construction, your general contractor Signal Hill, for a free consultation. Call (562) 555-1234 or visit our website to see our portfolio, including a 1,074 sqft addition in Cypress and a kitchen remodel in Rossmoor. As a DVBE contractor Signal Hill, we’re here to build your vision—on time, on budget, and with veteran-owned pride.
Follow our weekly blog for the latest construction trends, cost updates, and tips to make your project a success!
Sources:
- Construction Analytics, 2025 Inflation Forecast
- inFlow Inventory, Construction Material Cost 2025
- agmetalminer, Construction Industry Trends 2025
- houzeo, Cost to Build a House in California 2025
- firsttuesday Journal, California Residential Construction Starts
- Mortenson Q1 2024 Construction Cost Index