A recent report from the Remodeling Futures Program at Harvard University's Joint Center for Housing Studies projected that annual gains in homeowner spending on remodeling projects will cool in 29 of the nation's largest metro areas in 2019. The study suggests that metro areas with cooling home prices and sales activity will not be able to sustain the same pace of home improvement investment that they have in recent years. Bankrate highlights several other reasons, on the demand and supply sides, why home remodeling spending could temper in the near future.
On the supply side, existing tariffs on materials such as timber, aluminum and steel have driven up the cost of home improvement projects, according to a recent CNBC report. Furthermore, President Donald Trump’s threat of proposed tariffs on Mexico would drive up the cost of materials like brick and concrete dramatically, says Robert Dietz, chief economist with the National Association of Home Builders. Ultimately, those increased material costs will be passed down to homeowners looking to do renovations.
Another issue throwing a wrench into home remodeling demand—and costs—is a severe shortage of skilled laborers, Dietz says. Construction hiring remained relatively flat in May, up by more than 4,000 positions, following an increase of 30,000 jobs in April. Although the construction industry is poised for higher-than-average growth of all jobs in the next seven years, contractors are struggling to attract younger, native-born workers into those positions, Dietz says.
“A persistent shortage in skilled laborers in construction jobs is nothing new,” Dietz says. He adds that labor shortages typically prompt remodelers to pay higher wages, which in turn means customers pay higher prices and it takes longer to finish improvement projects.
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