The residential construction cycle moves in the same order every time. By the time prices fall, the sequence has been running for years. This is the sequence to watch…
I work in heavy civil construction (roads, water and sewer). Contractor bids have come down a lot and each project is receiving more bids. Based on our conversations with contractors the bid reduction is primarily coming from margin compression. So the past few years they were making a lot of money. The high number of bidders is the first sign there isn't enough work out there. Then prices come down and then eventually fewer bidders. I do agree that this cycle seems to be going in slow motion. Thanks for the great article.
Great analysis. I believe a likely explanation for the lack of decline in residential construction employment is that at the peak in 2022, there was a meaningful shortage of construction workers to build the houses. Timeframes for new home deliveries extended out months beyond norms. It was virtually impossible to get a plumber or HVAC person to handle a service call as they were swamped with new construction. By 2024, the residential construction labor maker was able to build new homes on time and handle service calls on installed systems. I think that dynamic likely explains the lag in layoffs at this point in the cycle.
I work in heavy civil construction (roads, water and sewer). Contractor bids have come down a lot and each project is receiving more bids. Based on our conversations with contractors the bid reduction is primarily coming from margin compression. So the past few years they were making a lot of money. The high number of bidders is the first sign there isn't enough work out there. Then prices come down and then eventually fewer bidders. I do agree that this cycle seems to be going in slow motion. Thanks for the great article.
We're right on time for the 18.6 year cycle for problems to arise
Great analysis. I believe a likely explanation for the lack of decline in residential construction employment is that at the peak in 2022, there was a meaningful shortage of construction workers to build the houses. Timeframes for new home deliveries extended out months beyond norms. It was virtually impossible to get a plumber or HVAC person to handle a service call as they were swamped with new construction. By 2024, the residential construction labor maker was able to build new homes on time and handle service calls on installed systems. I think that dynamic likely explains the lag in layoffs at this point in the cycle.
Hi Eric, I had one question did the boom in renovation of old houses has any role to play in construction employment not falling enough?