Insights into the Construction Industry and Housing Market Intel

Recent changes in the construction industry have organization leaders on alert in 2024. Reports have identified unique declines in demand and job opportunities in the residential housing market and the broader sector.

Here are some of the most pressing questions to consider to help you tackle your projects confidently.

Why Is the Housing Market Slowing Down?

The housing market has become a significant economic concern in recent months. While more new homes were built at the beginning of 2024 than any other four-month stretch, buyers continue to experience higher prices than ever. This trend is largely due to high interest rates, increasing costs and the decrease in housing starts due to the risk of unsold inventory.

According to the S&P CoreLogic Case-Shiller Home Price Index, the housing market saw an annual increase of 5.4% in housing prices during June, down a full percent from the record-breaking month in March. Economists explain that these prices are driven upward by high interest and mortgage rates, leading to this period being known as the most unaffordable housing market in history.

As of 2023, mortgage rates had climbed above 7%, making it difficult for first-time and younger homebuyers to get into the houses of their dreams. Despite high demand, these unaffordable prices have caused a massive drop in sales, which totaled 4.09 million — an 18.7% decline from 2022.

2024 has brought some relief to those hoping to buy a home. Price increases have slowed, and the Federal Reserve has cut interest rates, which have worked together to drop 30-year mortgage rates to around 6.36%, as reported by the Mortgage Bankers Association. Experts believe that mortgage rates will remain in the 6% range through spring 2025, making for a better season.

Why Is the Construction Industry Slowing Down?

The construction industry entered uncharted territory during the COVID-19 pandemic. Demand skyrocketed, and prices followed, contributing to an active housing market. However, the pandemic also caused many supply chain disruptions, leading to materials and equipment shortages and project delays. These factors were just a few contributors to the circumstances that caused the construction industry to lose close to 1 million jobs during the first few months of the pandemic, most notably for high-paying technology jobs that exploded during this time.

While much improvement has been made, construction companies are still dealing with the pandemic’s effects. Associated Builders and Contractors estimates that the industry needs to hire close to half a million workers in 2024 — and the same number in 2025 — to meet growing industry demand. Yet, experts predict that 1.9 million construction workers will leave their jobs for work in a different industry. Reasons for these mass exits range from reductions in new projects to shifts in cultural mindsets discouraging young workers from entering the industry.

Other reasons for a slowdown in the industry include:

• Higher material costs: Due to inflation and lasting disruptions in the supply chain, many companies have been experiencing higher prices on raw materials and employment.
• Limited demand: The industry is dealing with a backlog of newly built properties, decreasing the need for new projects to begin.
• Lower property values: Contractors receive lower prices for their commercial properties because of the lower demand within the market.

Key pieces of legislation, such as the Infrastructure Investment and Jobs Act, are predicted to provide the manufacturing, transportation and clean energy construction sectors with increased demand going forward in 2024 and beyond.

Get Your Hands on the Fleet You Need With Custom Truck By Your Side

Navigating a volatile industry can be a challenge without the right team by your side. At Custom Truck, we’ve been active within the construction industry for over three decades, providing customers with top-of-the-line fleet solutions to address their specific applications. We are your one-stop shop for all things heavy equipment and can provide short-term leases and equipment packages tailored to address smaller-scale projects.

Custom Truck One Source is the perfect partner to acquire the right fleet during this unprecedented time in history. Check out our collection of equipment and contact our team online for more information.