By Doug Ford
It’s that time of year again when we look forward and do our best to make an educated forecast for the year ahead. However, before we can do that, we do need to look backwards to set the stage for the year that lies ahead. As with many other businesses, the construction industry did not break any records nor allow for a lot of optimism, but that was expected. Unlike many other industries the construction industry benefited from people working and staying at home. A lot of unplanned money was invested to remodel, upgrade, and put in home offices to allow for an enjoyable and productive workspace at home while they waited out the COVID pandemic.
2023 was a “wait and see’ year. 2024 is lining up to be a “back to normal” affair for the housing industry. So, what does the year ahead have in store for the construction industry and those that support the trades like Curtis Lumber. I will do my best to break it down but I’m a lot more optimistic going into 2024 than the year we just completed. However, it’s not all bright and rosy. This year will have many carry-over challenges from last year, but the recent trend indicates a more favorable outlook.
Mortgage rate volatility and uncertainty around the Fed policy along with inflation have all contributed to interest rates that were not affordable or desirable to many that were in the market for a new home. With these three forces now moving in the right direction and likely to improve they could provide additional relief to those sitting on the sidelines. Locally the medium- to lower-end home categories were impacted more than the higher end and multifamily segments, as would be expected. The forecast for housing is optimistic but hinges on continued moderation of inflation and that the Federal Reserve will continue easing its stance on interest rates.
Building material manufacturers and suppliers have benefited from the slower pace and have been able to catch up, leading to more consistent lead times and a more consistent quality. This has helped to get the build cycle for new homes and construction projects back to normal or very close. This has brought back some efficiencies that were non-existent for the past three years.
Another challenge that is impacting, but not new to the construction industry, is the lack of labor. While some cooling has occurred in the construction labor market the market remains tight. The construction industry continues to struggle to attract younger workers. While workers under the age of 25 comprised 13.6 percent of the U.S. labor force, their share in the construction industry reached only 10.0 percent in 2021. Meanwhile, the share of older construction workers ages 55+ increased from less than 19.3 percent in 2015 to almost 22.3 percent in 2021. Around 67.7 percent of the construction workforce were in the prime working years of 25-54, compared to 63.5 percent in the overall workforce.
Unfortunately, this issue does not have a quick fix and will continue to be a problem for the unforeseen future. The good news is that through the efforts of organizations like the Northeast Construction Trades Workforce Coalition, students are now becoming enlightened at an earlier age about the lucrative and rewarding careers in the trades. The Northeast Construction Trades Workforce Coalition was formed six years ago as a joint effort between the Saratoga Builders Association and Curtis Lumber Company. This Coalition is now a not-for-profit organization that has grown to include over forty related organizations and interested stakeholder from across New York State and the northeast.
Early on it was recognized after considerable research that high school students were not aware of the opportunities the trades offered. Most school counselors were unprepared to speak with students about the various pathways into the trades. After wanting to blame the school counselors, we quickly realized our industry had done a terrible job connecting with the schools, counselors, parents, and students and ultimately, we are at fault. The sole mission of the coalition is to engage with the schools and help them understand the pathways into this industry which are many. We are hopeful the coalition can be an example for others to join in the effort or support the work being done by this group. If you would like more information about the Northeast Construction Trades Workforce Coalition, please reach out to Doug Ford (doug.ford@curtislumber.com or Pam Stott at pams@curtislumber.com.
Like any start to a new year, we can only make projections based on the data we have available to us and recent history. There are always those unknowns that can take us off course but I’m optimistic that we are on a good path to a successful year. We are very fortunate to live in the capital region which continues to be the bright spot in the economy for New York state. Let’s have a great 2024 and make great things happen in Saratoga County and the capital region.