Pipeline and Labor Issues Spur Problem-Solving
Given the unprecedented demand for new construction and design services, it’s no surprise that the industry is also seeing material and labor shortages, along with higher costs and less predictable timelines. “More than 9 in 10 construction businesses (92%) report labor shortages, including carpenters, laborers, framers, cabinet specialists and plumbers,” Sargsyan said. In fact, the shortage of cabinet specialists doubled from 2019. Shortages of plumbers, painters, framers, concrete specialists and flooring specialists increased 9 percentage points during that same time period.
More than 9 in 10 construction businesses reported increases in costs for lumber, copper, steel and aluminum in Q2 as well. The price hikes stem not just from supply-demand imbalances but also from tariffs and other trade restrictions on imported goods. The price hikes are accompanied by product shortages: More than three quarters of businesses in the construction sector reported that product and material shortages and costs impacted their businesses in Q2.
Both construction and design-build companies are coming up with creative ways to handle the issues, including buying materials during more favorable pricing windows, adding pricing escalation and timeline flexibility clauses to contracts, and utilizing construction project and client management technologies such as the Houzz Pro to stay on top of estimates, vendor schedules, invoices, and so much more.
Moreover, about half of businesses do not believe that costs will continue to increase in Q3, according to the Barometer. With production facilities reopening and people returning to onsite jobs, that belief is based on solid indicators rather than hope. But regardless of whether costs continue to rise, stay stable or decrease, building pros anticipate positive results for the rest of 2021. “Favorable conditions prevail, and professionals are confident about business performance through the end of the year,” Sargsyan said.