BuildFax’s latest Housing Health Report revealed year-over-year declines in single-family housing authorizations, as they have fallen 2.75% since 2018.
Also seeing declines are existing housing maintenance volume (0.75%) and existing remodel volume (0.33%).
The report uses U.S. property condition and history data to deliver economic trends, includes information on the states that had the largest year-over-year increase in average maintenance costs.
“So far, 2019 has revealed a dichotomy in the housing market—new and existing construction activity is declining steadily, while the spend on these projects is increasing consistently,” said BuildFax CEO Holly Tachovsky. “Spending is rising, in part, due to increased tariffs on construction materials, tightening labor and construction markets and an uptick in natural disaster activity. Colorado, Florida and Washington have seen the greatest increases in maintenance spend year over year, which may indicate a relationship between elevated construction costs and national affordability challenges. We expect that construction spending on the existing housing stock will eventually start declining as demand slows. As we move further into 2019, we will be monitoring whether these indicators begin to move in parallel to evaluate if such a shift in the housing market is realized.”
The report states that while maintenance volumes declined 0.75%, spending rose 6.68%, and remodel spending grew 2.47% despite a decline in the volume of remodels.
Colorado had the highest year-over-year construction spending increase at 26.50%. Washington and Florida also saw increases of 17.79% and 13%, respectively.
“These increases are likely a result of the lasting impact of tariffs on construction materials like steel and lumber, a nationwide skilled labor shortage, and increased stress from natural disasters,” BuildFax stated.
Although there are sections of the nation that saw increases in construction costs, the latest Producer Price Index (PPI) shows that the prices paid for materials used in residential construction decreased 1.1% in June, breaking a four-month trend of increases.
The decrease in the PPI, released by the National Association of Home Builders (NAHB), is only the fifth time in the past two years where home prices fell.
Prices for building materials have decreased 1.6% year-over-year, and June 2019’s decline is stark contrast from June 2017 to June 2018 when prices grew 8.8%.