The volume of home maintenance and remodeling projects is declining, while spend for both is increasing, and this all signals the likelihood of a continued slowdown for the housing market.
According to the latest Housing Health Report from BuildFax, the volume of home maintenance projects declined 0.75% from last year while spend rose 6.68%.
Home remodeling projects also declined, falling 0.33% year over year while remodeling spend rose 2.47%. (See chart from BuildFax below; click to enlarge.)
What gives? Blame an uptick in construction labor costs due to a lack of skilled labor, and more expensive materials thanks to the lasting impact of tariffs on lumber and steel. And the onslaught of natural disasters in the past year has only made things worse.
The report also shows that much of the spend is concentrated in states where affordable housing is bringing an influx of residents, like Colorado, Florida, Washington, New Mexico and Kansas. (See chart from BuildFax below; click to enlarge.)
BuildFax said that even though construction costs are high, homeowners in popular markets are apparently inclined to pay the price. Keeping tabs on what markets are still seeing homeowners invest in their properties despite a nationwide housing slowdown can provide a deeper understanding of which areas have a higher risk tolerance, BuildFax said.
“We’re seeing a distinct push and pull in the housing market. Affordability challenges are pushing homeowners out of high-density states like California and New York. Meanwhile, affordable markets are still pulling in new residents who want to buy a home,” said BuildFax CEO Holly Tachovsky.
“Amidst a slowdown, states with a new-found population growth present a particularly interesting subsection to monitor. We expect that construction spend on the existing housing stock will eventually start declining as demand slows,” Tachovsky continued. “As we move further into 2019, we will be monitoring whether these indicators begin to move in parallel to evaluate if such a shift in the housing market is realized.”