Contractors: business down big time

Posted at 4 p.m. on November 4, 2021

New home starts drop by 44 percent

Biden vaccine mandate will make things worse

The Brillion News

The latest new home construction numbers in Wisconsin show a dramatic slowdown in the number of permits pulled, signifying a major decrease in the number of new home starts.

The data, submitted by all municipalities across the state, shows 2,450 permits were pulled between July 1 and September 30 of this year, 44 percent less than the 4,382 permits pulled in the second quarter of the year.

Permits were up 38 percent in the first half of 2021 compared to the same period in 2020, however at the end of the third quarter, year-to-date permits are up just six percent compared to 2020 numbers.

“Numbers in the first half of this year were great despite the increased building prices at that time, but we’re now starting to see the effect that peak building material prices have had on the industry,” said Wisconsin Builders Association (WBA) Executive Director Brad Boycks. “Many homeowners decided against signing contracts over the summer while they waited for prices to come down.”

Material prices and supply chain delays have greatly impacted home building.

At its peak, the cost of lumber added $36,000 to the cost of an average-sized new home, while prices of steel mill products, resins, windows, door frames, copper pipe and tube, and other necessary building materials have all increased by 30 percent.

“Remodeling projects have been up with people making changes to their existing homes to avoid the overall costs that building a new home presented over the summer,” said WBA President Abe Degnan. “With the supply chain issues we’re currently experiencing, remodeling and new home construction alike are going to continue to feel the pressure.”

One major homebuilder said it is harder to lock in new project contracts.

“Our production staff is spending more time scheduling, rescheduling, and resourcing our materials for current projects,” said David Belman of Belman Homes of Waukesha. “This coupled with low lot inventory and a leveled-off existing home market are huge factors when it comes to the inability to lock in new building contracts.”

Non-residential

Total construction spending declined in September for the first time since February, as both residential and nonresidential construction slipped, according to a new analysis of federal construction spending data the Associated General Contractors of America released today. Officials urged the House of Representatives to promptly complete work on the bipartisan infrastructure bill that the Senate passed earlier this year, noting that spending on infrastructure in the first nine months of 2021 fell short of year-earlier levels.

“Spending on projects has been slowed by shortages of workers and materials, as well as extended or uncertain delivery times,” said Ken Simonson, the association’s chief economist. “And the extreme rise in materials costs is likely to mean some infrastructure projects will no longer be affordable without additional funding.”

Construction spending in September totaled $1.57 trillion at a seasonally adjusted annual rate, down 0.5 percent from August. Year-to-date spending in the first nine months of 2021 combined increased 7.1 percent from the total for January-September 2020. While both residential and nonresidential construction declined from August to September, the two categories have diverged relative to 2020 levels. Residential construction spending slipped 0.4 percent for the month but was 24.5 percent higher year-to-date. Combined private and public nonresidential construction spending decreased 0.6 percent in September and 5.8 percent year-to-date.

Most infrastructure categories posted significant year-to-date declines, Simonson pointed out. The largest public infrastructure segment, highway and street construction, was 1.3 percent lower than in January-September 2020. Spending on public transportation construction slumped 6.8 percent year-to-date. Investment in sewage and waste disposal structures was the sole exception, rising 4.3 percent, but public water supply projects dipped 0.9 percent and conservation and development construction plummeted 19.5 percent.

Vaccination orders

Associated General Contractors said it has been supportive of getting workers vaccinated against COVID-19, but it has little good to say about the mandate issued by the Biden Administration on November 4.

“Instead of providing additional resources and support to encourage workers to do the right thing, the Biden administration’s new vaccine mandates will make the challenge of vaccinating more construction professionals harder, based on our initial analysis of the measure,” said the chief executive officer of the Associated General Contractors of America, Stephen E. Sandherr. “The rule creates more confusion than clarity. For example, the measure claims to require workers to incur the costs of testing, yet it also says many employers will likely be required to pay those workers for the time spent getting tested. The rule also claims to exempt people who work outside – something many in construction do – but then defines outside in a way that excludes just about every occupation traditionally performed outdoors.”

Sandherr said construction firms are already having a hard time finding workers they need, and the Biden Administration’s order will only make matters worse.

“The Biden administration isn’t even clear on whether there is an emergency to justify this rule’s rapid drafting and implementation,” Sandherr said. “On one hand, the narrative refers to the rule as an Emergency Temporary Standard while also labeling it an Interim Final Rule. And while declaring an immediate emergency, the measure also finds the time to ask for comments over the next 30 days.”

~ Ed Byrne/BN from WBA and AGC sources.