On Tuesday, the home-design website Houzz released its Renovation Barometer for the third quarter of 2016, which tracks confidence in the home renovation market among remodelers, general contractors and design firms.
Respondents cited skilled-worker shortages among the factors driving labor costs up, both in needing to pay higher rates for subcontractors (half of respondents) and paying their own workers more (one-third of respondents). Eight in 10 professionals reported labor shortages during the quarter, on par with the first and second quarters of 2016.
Still, confidence among general contractors, remodelers and design-build firms stayed consistent or increased slightly from the second quarter of 2016, reading 64-77 compared to 63-78 in the second quarter. Scores above 50 indicate an increase in remodeling activity.
Construction job openings are at their highest level in a decade, according to a report last month from the Associated General Contractors of America, and there is plenty of work to go around. But a lack of skilled laborers is pushing up project costs as firms pay more to hire workers in order to complete projects on schedule.
In a 1,500-member survey this summer, the AGC reported that seven in 10 contractors were struggling to fill hourly skilled positions, while nearly half of the companies surveyed said they raised the pay for that group as well as offered more in-house training and added overtime hours.
Meanwhile, home remodeling values are expected to grow 8% annually through mid-2017 to $321 billion, according to the Joint Center for Housing Studies at Harvard University. Kitchen and bath remodels remain popular, in addition to insulation upgrades. In its 2016 Cost vs. Value Report, Remodeling magazine found that adding fiberglass insulation to attics as well as installing manufactured stone veneer and replacing various exterior doors were among the projects with the highest payoff at resale.
In its third-quarter report, Houzz noted that a majority of firms posted quarterly gains in project inquiries and project size, with the landscape sector showing an expected seasonal cool-down.