For almost seven months, the housing market has been slowing across new and existing construction activity, including new home building, large-scale remodels and general home maintenance projects. The June BuildFax Housing Health Report (BHHR) revealed, however, that even as demand for construction slows, spend is still rising, propelled by 2019 economic conditions.
New and Existing Housing Supply
Single-family housing authorizations decreased 2.79% year over year and 0.51% month over month, signaling a continuation of the 2019 housing slowdown. These decreases in new construction suggest the rise in month-over-month single-family housing authorizations seen in May is an anomaly.
New and Existing Housing Supply Activity, June 2019
- Single-family housing authorizations decreased 2.79% year over year.
- Existing housing maintenance volume decreased 0.75% year over year.
- Existing housing remodel volume decreased 0.33% year over year.
Nationwide Affordability Trends Contribute to Rising Construction Spend
The overarching reasons for rising spend include the lasting impact of tariffs on construction materials like steel and lumber, a nationwide skilled labor shortage and increased stress from natural disasters.
A state-level analysis of construction spend on the existing housing stock revealed another trend: states with the largest increases in maintenance spend are affordable housing markets with net positive domestic migration. This is an indication that homeowners are still willing to spend on remodel projects, maintenance work and new home building, even at marked up rates, in states that are relatively affordable.
See the full analysis here.
“We’re seeing a distinct push and pull in the housing market,” said BuildFax CEO Holly Tachovsky. “Affordability challenges are pushing homeowners out of high-density states like California and New York. Meanwhile, affordable markets are still pulling in new residents who want to buy a home. Amidst a slowdown, states with a new-found population growth present a particularly interesting subsection to monitor.”
For more insight on the health of the U.S. housing market and which markets are still seeing positive housing activity, download the June 2019 report.