Outlook for the Construction Industry in 2024
Despite the uncertainties 2024 holds for small business owners, there is optimism for a soft landing that will enable sustained economic growth and strong employment without a significant rise in inflation.
According to For Construction, higher interest rates in 2023 drove mortgage rates to levels not seen since the run up to the 2008 financial crisis. The rise in mortgage rates slowed existing home sales which in turn caused a pullback in the sales of home furnishings, home improvement supplies, and demand for residential construction services. Fortunately, new housing starts bottomed in early 2023 and rose throughout the year and, as interest rates decline in 2024, we expect to see demand for contractors, home furnishings, and home improvement rebound.
Although we expect improved demand for home renovations in 2024, we also see a challenging environment for many contractors as interest rates remain high while unemployment remains low. This means that contractors will struggle to find quality workers at affordable wages, while the cost of financing new work remains high and demand remains below 2021 and 2022 levels.