Nominal construction spending is on the rise, while total construction spending fell roughly 1.1% on a seasonally adjusted, annualized basis in June 2022 as total volume dropped below historic levels in an inflated economy, according to JLL’s mid-year construction analysis.
The Northeast saw the largest contraction in the first half of 2022, while the West has accelerated its pace of billing and backlog increases in recent months. The South and Midwest are still seeing strong but decelerating billings growth that will lead to a large pipeline in the year ahead. Building material price volatility and pullback in the construction labor market remain two of the largest obstacles for home builders across the U.S.
The largest impacts the labor situation will have are the continued wage pressure and potential delays in projects. The favorable situation for labor is expected to accelerate wage growth in the second half of the year, continuing to pressure margins. Though outright cancellations have remained limited, delays due to labor shortages are a nearly universal experience with no relief in sight.