This is marketing research on the Construction Alteration and Repair industry and can include information on the background, market structure, definitions, competitors, trends and developments of construction alteration and repair and is related to other topics such as housing, housing starts, condos and rentals.

Table of Contents

Table of Contents

1 Background 
2 Market Structure 
3 Market Metrics 
4 Recent Trends and Developments 
5 Sources

Background

This category encompasses spending for upkeep and repairs as well as improvements to existing residential structures. Maintenance and repairs continue to account for the bulk of spending for rental properties, while improvements account for the greater share of spending on owner-occupied units. Included in this work are projects such as painting, appliance replacement parts and repair, and roof repairs. The improvements category involves additions to structures and major replacements of structures and other property.

Examples of improvements include major exterior and interior structural changes, fences, and the replacement of furnaces and water heaters. For do-it yourself work, the cost of materials and parts is included but the labor cost element is not.

Market Structure

Residential remodeling and repair work increased in 1999, reflecting the growing stock of housing and a heavy turnover of used homes. Although the data for maintenance and repair construction are not as complete as those for new construction, the available information indicates that 1999 was a record year for maintenance and repair work. Nonresidential building improvements (commercial remodeling and renovation) also appeared to be at record levels.

Construction costs increased about 4 percent in 1999, as measured by the U.S. Bureau of the Census’s fixed-weight construction cost deflator. This was faster than the average annual rate of increase during the previous 5 years and faster than the rate of increase in the consumer price index. Prices for building materials rose an average of about 2 percent in 1999, although there were serious materials shortages during the peak construction season. Land prices appear to be escalating, and double-digit increases are common in some of the stronger markets. (Land prices are not included in the construction cost index.) Insurance and bonding costs have continued to increase, although the overall availability of insurance is better. Labor costs have increased because of tight labor markets, with average hourly earnings of construction workers increasing about 4 percent in 1999.

Home improvement and repair construction will continue to grow faster than will new home construction. Much of this demand will result from home owners adding rooms and amenities. In addition, the stock of housing is steadily growing larger and older, providing a growing base demand for home improvement and repair construction.

Market Metrics

Construction alteration and repairs have increased sharply since 2000 and track the general surge on construction overall in the U.S. The low interest rate and relatively easy availability of credit fueled this rapid growth. Homeowners often tapped the value of home equity to make further home improvements and repairs during the period. This environment has largely stopped by mid 2007 as interest rates have risen and credit availability has been curtailed.

The U.S. Census Bureau of the Department of Commerce announced that expenditures for improvements and repairs of residential properties in the second quarter 2007 were at a seasonally adjusted annual rate of $226.7 billion. This estimate is 4.3 percent above the revised first quarter 2007 estimate of $217.3 billion. Spending on maintenance and repairs was at a seasonally adjusted annual rate of $58.0 billion in the second quarter 2007; improvements amounted to $168.7 billion.

Recent Trends and Developments

Expenditures for home improvement and repair increased fairly steadily in the 1990s. Spending for this type of work tends to be less volatile than that for new construction, and the growth has been somewhat greater over the long term. This trend is expected to continue into the twenty-first century. The stock of housing will grow larger and older, and sales of existing homes will continue to increase.

Nonresidential repair and renovation markets probably will continue to grow in 2000 and for the next 5 years. Electric utilities in particular are likely to increase their maintenance and repair expenditures substantially. Investment in nonresidential building improvements will remain at high levels as the owners of commercial buildings attempt to keep their buildings attractive in the competitive rental markets. A side effect of the turmoil in the retailing industry will be massive remodeling of existing stores.

Sources

• Most recent US government sources