The Federal Reserve Bank of Minneapolis is offering its insights into conditions in the construction sector throughout much of the upper Midwest. Their recent survey, conducted last month, gauged the activity and near-term outlook of over 250 builders in both the residential and commercial construction space.
Builders anticipate that the rest of 2023 will be less prosperous than previous years. Inflation and climbing interest rates are leading to a slowdown in would-be new or future projects as buyers begin to hesitate.
Overall, the survey found a persistent negative revenue trend among builders. Residential builders reported one of the largest reported declines in revenue among those surveyed.
Additionally, as the market shifts, more builders are reporting project cancellations and delays. According to the results of the survey, over the last three months, 39% of builders say they experienced more cancellations, and 50% report more project delays.
Labor availability continues to be a primary concern among all sectors of the construction industry. Of those surveyed who have sought out new hires, 57% reported today’s labor market as “very tight.” As a result, builders are looking for new ways to hire workers including offering more pay.
Around 30% of firms report increasing their hourly wage in the last year, and 20% anticipate increasing wages by the end of the year.
Despite all of this, the Fed’s survey found that builders are still looking for ways to grow and adapt to the new market. 41% of residential builders indicated an optimistic outlook for the near future while 28% reported feeling neutral.