Builders, remodelers confident despite labor, inventory woes

Dive Brief:

More industry pros are seeing market activity growing versus declining, according to the Q1 2017 Houzz Renovation Barometer, a quarterly survey of architecture, design, contracting and other building firms that tracks renovation business activity.
Year-over-year, remodelers and design–build companies continued to show optimism about market conditions, while architects started 2017 on a high note after a three-quarter slide in confidence. Optimism among building and outdoor specialty firms declined during the period.
Three out of four general contractors, remodelers and design/build firms are experiencing moderate to severe labor constraints. The biggest challenges remain in finding skilled finish carpenters (41% of respondents), general laborers (36%), framers (25%) and tilers (22%).

Dive Insight:

The Houzz study’s findings are consistent with other readings in the industry. The latest reading of the National Association of Home Builders’ Remodeling Market Index, which measures market activity, dipped in the fourth quarter of 2016 but kept in positive territory for the 15th-straight month.

Still, the Joint Center for Housing Studies of Harvard University reported that while home improvement and repair spending will surpass its previous peak, reached in 2006, it may moderate later in the year.

With builders, confidence for the market for new single-family construction is still high. The NAHB/Wells Fargo Housing Market Index reached its highest level since June 2005 in March. It fell three points in April but remained above the breakeven mark of 50, indicating continued optimism.

On the labor front, shortages continue to constrain both remodelers and builders. A recent study by the NAHB found that the cost and availability of labor remains a challenge, with 78% of builder respondents reporting labor shortages in 2016 and 82% forecasting the same for 2017. In an earlier report, the NAHB noted that 78% of builder respondents identified a shortage of rough carpenter subcontractors versus 72% saying the same for rough carpenters on their own crews.

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