Trends To Watch for Remodeling Contractors
Nationwide shares the latest trends for remodeling contractors.
According to Nationwide, although many industries experienced economic hardships during the COVID-19 pandemic, some sectors thrived. For remodeling contractors, the unique dynamics of the pandemic economy brought increased business. People were motivated to make various household improvements as they spent more time in their homes than ever.
This shift led to a 25% increase in residential construction during the pandemic years.1 Further evidencing this trend, the remodeling industry saw spending on home improvements and repairs grow by 3% in 2020, despite the overall U.S. economy shrinking by 3.5% during the same period.2 This trend gained steam, peaking in 2022 when spending on home remodeling surged by 16%.3
Moving forward, the remodeling market will continue to be driven by several factors. For example, homeowners continue to have record levels of home equity to support financing renovations. Additionally, energy-efficient retrofits incentivized by the Inflation Reduction Act of 2022 and property repairs prompted by Hurricane Ian will further support growth in the coming year.4
Impact of skilled labor shortages
The construction industry, including remodeling contractors, continues to face significant shortages in skilled labor. In early 2022, it was estimated the industry would need to hire an additional 650,000 workers above its current hiring pace to meet demand.5 So far, that goal isn’t being met. In September 2022, after hiring 348,000 new workers, the construction industry still had 412,000 open positions, according to the U.S. Bureau of Labor Statistics.6 In other words, contractors wanted to add more than twice as many workers as they could find.
Several issues are driving these shortages, including an aging workforce, a lack of interest in the trade professions among young workers and increased wage competition from other professions. The number of construction workers ages 25-54 fell by 8% over the last decade, while the share of older workers exiting the profession soared. With an average retirement age of 61 and more than 1 in 5 construction workers being older than 55, 20% of the industry is at risk of leaving within six years.7 Meanwhile, wages are rising faster in competing fields. For example, between December 2019 and December 2021, construction wages grew by 7.9%. However, at the same time, wages in transportation and warehousing rose by 12.6%, posing tempting alternatives for experienced workers and young people entering the workforce.8
Over time, a persistent lack of skilled labor often leads to contractors lowering their job standards and hiring less experienced workers, creating several downstream effects. For starters, because inexperienced workers need more on-the-job training, projects tend to take longer. Second, quality control may suffer, as inexperienced workers could fail to meet performance standards. Finally, inexperienced workers are at higher risk for on-site accidents involving themselves and others, leading to a less safe work environment.9
