The Construction Beat: 2022 construction concerns, slowing home sales and hot cities for multi-family housing builds

The most important news updates from across the industry

Sam Garrett / Buildertrend

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We at Buildertrend know the industry moves fast – and want to help you keep up. Because we also know a more informed construction team is a more successful and inspired one. That’s why we deliver the most newsworthy updates, all in one place. With “The Construction Beat,” check out what’s been happening around the industry – and why it matters to you.

This week, we’ve got updates for you on doubts for a 2022 construction recovery, where $1 trillion in construction funding may flow, signs of a cooling housing market and the hottest multi-family housing markets.

Delta variant to loom over construction in 2022, economists predict

The Delta variant is beginning to surge across the United States. The Centers for Disease Control and Prevention notes that the Delta variant is twice as contagious as earlier forms of COVID-19, can cause more extreme illness in some cases and can be spread by fully vaccinated individuals. Given this, a large cloud looms over construction for what was supposed to be an industry-wide recovery in 2022.

Residential construction continues to outpace nonresidential construction in 2021. But even so, all three major sectors – residential, nonresidential buildings and nonbuildings – saw starts dip 3% in July while initial planning fell 9%. Economists predict that as we head into the fall and winter seasons, when job starts regularly dip, those drops could fall to more extreme numbers due to concerns with the Delta variant.

To prepare for possible business interruptions caused by the Delta variant (and possibly newer viruses), builders can take several proactive steps. First, protect your business by avoiding simple mistakes within your contracts. Second, use escalation clauses to protect your business in the event global supply chains are again interrupted and cause material prices to increase. Finally, review Buildertrend’s podcast on contracts with Nick Knihnisky, our vice president of general counsel.

Where’s the bulk of the infrastructure funding headed?

The House of Representatives recently advanced the $1 trillion infrastructure bill and approved a $3.5 trillion budget resolution. As part of the vote, the House included a commitment to hold a final vote on the infrastructure bill by Sept. 27, making it much more likely the bill will pass.

Once fully approved by the House, the bill will go to President Joe Biden’s desk for approval. From there, the $1 trillion, including over $550 billion allocated for the construction of new roads, bridges, public transport and water, will begin being divided among the states.

California, Texas, New York and Florida will receive the most funds in total. The Biden administration said California should expect nearly $45 billion, Texas will likely receive $34.5 billion, New York should get $26.9 billion and Florida can expect $19.1 billion. But far less populous states, such as Alaska, Montana and Wyoming, are predicted to get the most money per capita.

Housing Market Update:

Just like temperatures heading into the fall season, the 2021 housing frenzy has begun to cool. But even as one of the craziest markets our country has ever seen starts to wind down, homes have taken much longer to sell and prices have stagnated, with some even lowering, according to a new report by Redfin.

As is typical for this time of year, home buying is slowing down as outdoor summer activities end. But with less demand, homes are listing for longer. Homes sold in the month of August were on the market for an average of 18 days, up from a record low of 15 days in both June and July. With demand slowing and homes taking longer to sell, some sellers are beginning to lower their prices: 51% of homes sold above the list price, a measure that has consistently fallen since the week of July 11.

The latest data shows buyers are less willing to pay incredibly high prices than they were even 60 days ago.

“The housing market has clearly become slightly more favorable to buyers,” said Redfin’s chief economist Daryl Fairweather.  “Homes are taking longer to sell, which gives buyers more time to make thoughtful decisions about whether to make offers. Home prices have plateaued, so buyers shouldn’t feel rushed to buy before prices rise further. And the fact that more sellers are dropping their list price is a sign that sellers have to be realistic about their price expectations.”

Southern U.S. cities named top multi-family housing markets

One of President Biden’s initiatives prior to taking the White House was developing more multi-family homes. This initiative continues to prove more relevant. As the American housing crisis has only worsened in the last 8 months, construction of multi-family homes stands poised to have one of its best years in 2021.

Research from Yardi Marx identified a host of major cities in the Southern U.S. as the top five markets to build multi-family developments, based on occupancy, number of units built in 2021 and number of units still under construction.

The hottest markets for multi-family housing are:

  1. Dallas
  2. Houston
  3. Atlanta
  4. Miami
  5. Phoenix

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About the Author

sam garrett - law clerk at buildertrend
Sam Garrett

Sam Garrett is a law clerk at Buildertrend

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