Remodelers Report Backlogs, Labor Shortages as Market Grows

By: Jann Swanson •

Home remodeling activity reported by builders increased in the third quarter and remains above the benchmark 50 level for the 18th consecutive quarter. The National Association of Home Builders' (NAHB) Remodeling Market Index (RMI) rose 2 points to 57 as more builders reported increased market activity compared to the previous period than reported it as lower.

NAHB's survey asks remodelers to report current activity overall, and in three areas, major additions and alterations, minor additions and alterations and home maintenance and repairs. The measure of overall activity increased 1 point to 56; the major additions component dipped 1 point to 53, minor additions rose 3 points to 56, and the maintenance and repair category was up 1 point to 58.

The survey also looks at future conditions, and those overall, rose 3 points to 58. Calls for bids and backlogs of jobs were each up 2 points to 56 and 60 respectively. Appointments for proposals rose 4 points to 59.

The overall RMI averages ratings of current remodeling activity with indicators of future remodeling activity.

Remodelers report difficulties in finding skilled labor, especially finish carpenters. Over 90 percent of respondents reported a shortage of that skill compared to the third quarter of 2013 when only 44 percent of respondents reported such a lack.

"Remodelers are seeing higher demand in residential repairs, and expect to be busy well into the new year with jumps in work backlog, call for bids and proposal appointments, likely due in part to the significant damage caused by hurricanes across the southern states," said NAHB Remodelers Chairman Dan Bawden.  "However, the ongoing labor shortage is constraining how quickly the repairs can be completed."

"In addition to the labor shortage, the cost of materials is becoming a pressing issue for remodelers," said NAHB Chief Economist Robert Dietz. "Both of these issues are constraining remodelers' ability to complete projects in a timely and cost-effective manner, especially moving forward after natural disasters."