Construction Trend Tuesday

Renovations up, new homes down

Construction Trend Tuesday covers one (hopefully) interesting industry trend in a quick, two minute read. You can access the archive of CTT posts here. If you’d like to sponsor CTT posts, just respond to this email or drop us a comment.

There are about 275,000 fewer homes under construction than there were two years ago but 28,000 more residential building employees.

Because of the downturn in units under construction, I was pretty sure homebuilders would cut their staffing levels in early 2025.

At least through February, I got this one very wrong.

The most plausible explanation: we’re still spending a lot on residential construction, just not on new homes. As you can see below, renovation/improvement spending has continued to grow while spending on new homes has leveled off.

Renovation and improvements account for more than 40% of residential construction work as of February. Given current economic dynamics, this makes sense: with rates so high, some homeowners are investing in their current homes instead of moving. Others are likely preparing to move when rates do drop, and that means taking care of any necessary repairs or renovations.

It’s usually not a great sign for the economy when renovations’ share of residential construction spending goes up.

What’s Next

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