If you’ve noticed an uptick in real estate sign posts dotting your drive to work or the harmony of drills, saws, and construction, you’re not alone. In fact, according to statistics from the U.S. Census Bureau that track construction spend, 2020 brought the largest increase in residential construction in more than a decade. This is even more noticeable when you consider that 2019 was marked by a notable decrease in spend and 2018 saw a drop by approximately 68 percent below the prior year.
But if the pandemic has slowed us down, how is residential construction facing a boom? Industry experts point to basic supply and demand as one cause for revenue growth in home construction and renovation. For instance, when you look at new home sales alone, the nation saw a 21 percent rise in demand from 2019 to 2020. And to put this into perspective, the last time we as a nation saw this level of annual growth in residential construction was in 1983. The pandemic has clearly sparked an interest in settling down and home sweet home.
This rise in demand for residential home construction, however, has left buyers competing, out-bidding one another, and prepared to pay premiums for the homes and renovations they desire. Likewise, those who plan to renovate or purchase new construction in 2022 are expected to pay a premium for labor and building materials. And as current supply issues and labor shortages come head-to-head with rising buyer demand, cost is inching up. Moreover, labor shortages aren’t expected to end soon, with younger generations steering away from skilled trades—leaving mid-career and advanced tradespeople now in high demand and expecting higher compensation for it.
Overall, though, the outlook for 2022 remains positive, and the spike in cost for building materials is slated to level out soon as supply chain issues are resolved. Still experts don’t see consumer demand letting up quite as quickly. New home construction and remodeling projects are projected to continue in their upward trend throughout the year, with many homeowners eyeing their next project before they can even finish their current job.
Other factors to consider are new worker safety issues due to COVID-19, which tacks yet another expense to the consumer’s bottom line. To fill staffing gaps, some employers are also eyeing new innovations to ease and automate some of the more hazardous and mundane tasks. For instance, the use of robots and construction drones have been found highly effective in mitigating risk and freeing workers to focus on more strategic matters. Meanwhile, the industry as a whole is working to attract a new generation of skilled tradespeople into a booming and exciting field by promoting the high school to trade school pipeline and by providing new entrants with great benefits and abundant career growth.