Housing could be in for a slowdown as three indicators of new- and existing-home construction activity fell year-over-year for the first time since 2011, according to BuildFax.
“More so now than in years prior, the compounding effects of natural disasters, scarcity in the construction labor market and recent tariffs have impacted housing growth — not to mention systemic factors, like rising mortgage rates, that influence consumer behavior,” BuildFax Chief Operating Officer Jonathan Kanarek said in a press release. “While it’s natural to see some leveling off after steep growth, the next few months will be telling; whether a downturn is on the horizon or the market is simply softening is yet to be seen.”
New single-family housing construction authorizations fell 0.86% in November from one year prior and by 0.58% from October, the BuildFax Housing Health Report said. A bright spot, however, is that the trailing three-month outlook for September to November is up 3.68% over the previous year, because of September’s growth, the company added.
Maintenance volume fell by 5.85% when compared with November 2017, when the maintenance spend fell by 15.39%.
Remodeling, which is a subset of the maintenance data that includes renovations, additions and alterations, saw a 12% volume decline and a 1.15% spending decline from the previous year.
There were 10 occasions in the past decade where single-family housing authorizations, maintenance and remodels all declined year-over-year, with eight of those taking place during 2008 and 2009 at the height of the Great Recession, BuildFax said.
New commercial construction volume fell 0.87% from November 2017, while maintenance activity fell 1.5% and remodeling fell 4.28%.
But the drop in commercial activity may be more indicative of a labor shortage. Between 2013 and 2018, new construction activity rose 28.42% and maintenance was up 22.21%.
Factor in that new construction costs over that period rose 68.83%, the disproportional increase when compared with activity points to a labor shortage that caused the year-over-year decline, BuildFax said.