Homeowners planning major renovations this year could face sticker shock.
The price of construction and building materials rose 3% in February from a year ago, labor data shows. But some items have skyrocketed. The cost of construction bricks has jumped 25%, while general contractors are charging more amid a shortage of skilled workers, Wall Street Journal reporter Rachel Wolfe told CBS News.
“That has led to these projects just dragging out and dragging out,” she said, adding that some Americans are just “living in these half-finished houses among piles of construction debris because there just aren’t enough workers to finish the job.”
The construction industry needs about 546,000 additional workers to keep up pace for 2023, the Associated Builders and Contractors said last month. Homeowners typically call contractors when it’s time to renovate their property.
Despite higher material costs, improvement projects will continue to be a top priority for homeowners this year as opposed to moving into another property, according to Houzz, an online home renovation marketplace. That’s partly because more homeowners are staying put, deterred from trading up by historically high mortgage rates. Most homeowners planning to renovate have their sights set on remodeling a bathroom or kitchen, while smaller numbers are looking to hire a professional to spruce up electrical wiring or cabinets, the survey found.
The median cost of revamping a kitchen and main bathroom — the two most popular renovations homeowners undertake — is $20,000 and $13,500 respectively, Houzz found. That’s an increase from $12,000 and $8,000 respectively in 2020, according to Houzz.
Contractors are also feeling the impact of higher building material prices and labor costs.
“We have prices on one side, homeowners on the other side and we’re squeezed in between,” Miguel Villamil, who owns a general contracting firm in Indianapolis, told CBS News.
Still, the elevated price of building materials didn’t deter homeowners from making upgrades last year. In 2021, 24.5 milion homeowners completed at least one home improvement project — up from 22.2 million in 2019, according to a Harvard University study.
All told, Americans spent an estimated $567 billion on home improvements and repairs in 2022, up 15% from 2021, the Harvard study found. That figure is expected to reach $580 billion this year.