Top 5 Construction Trends of 2022

If you’re wondering what’s going to happen in the construction industry this year, you’re not alone. The sheer unpredictability of the industry as a whole invites conjecture so that contractors can more easily stay on top of what’s coming down the road so that they can more successfully operate their businesses. In this post, we’ll discuss the top five construction trends in 2022, giving you the low down on what to expect this year and into the future.

1. Strong Advancements in Materials

Though new materials are constantly being developed and invented, the pace of innovation brought about by digital transformation is taking the industry through a golden age of materials science. The materials you may expect to see this year or shortly in the future include transparent aluminum to reduce structural weight while improving natural lighting and visibility as well as self-healing and flexible concrete formulations.

2. Increases in Demand for Modular Construction

Both prefabricated and modular construction are seeing strong growth, partially due to the many benefits that can be realized using these technologies and building methods in construction. These benefits include reduced materials and shipping costs, reduced construction waste, higher overall quality of the finished structure, time reductions up to half of the time of traditional construction methods and reducing costs by up to 20%, causing growth expected to reach $157 billion by next year. 

3. Labor Shortages

It’s not just fast-food restaurants that are short-handed these days, as labor shortages continue to plague the entire economy. For this reason, retaining good labor and hiring solid new labor is an important part of keeping your projects operating smoothly. Shortages make having skilled labor who can successfully, profitably finish your projects more difficult than ever. However, offering good benefits, training opportunities and competitive wages make the process easier, and robotic assistance is becoming much more of a reality on the construction site.

4. 3D or Additive Manufacturing

No longer the purview of computer geeks and engineers, 3D printing has come into its own in the construction industry. Known in commercial production as additive manufacturing, this production method can help you get through some supply chain issues to manufacture everything from replacement parts and components for your project to constructing modular and emergency or basic housing for a wide range of needs. They’re also useful for creating construction models featuring a high level of detail.

5. Digital Transformation

Unless you’ve been asleep at the wheel, you’ve probably heard the term digital transformation mentioned as it sweeps through every industry on Earth. It includes AI, machine learning, cloud computing, analytics, Internet of Things, pervasive networking and other technologies that work together to improve safety, efficiency, productivity and profitability on your projects. Newer technologies include robots that can handle bricklaying, cloud-based applications to improve crew communication, seamless workflows and document tracking for your company.

By staying on top of changes and trends in construction, you can more readily discover which technologies you should invest in early and which ones you should avoid to improve profitability. Check out our blog for more construction industry news!

Trends in Home Design that Homeowners Want

Home design trends changed a lot during the COVID-19 pandemic. Spending time indoors and at home changed the perspective of many homeowners and home buyers, especially as the pandemic dragged out over the course of 2 years.

Functional, flexible spaces – spaces that can be used for spending time together with many members of the household – are more important than ever. Meanwhile, grays and neutrals have been replaced by bold, vibrant colors that lift the spirits and create eclectic environments. This makes spending time indoors with family easier on the eyes and easier on the spirit. 

Whether you’re a builder of custom homes or a general contractor, you’ll want to keep an eye on these trends and be prepared to talk to your clients about these trends. 

1. Open Layout and Hybrid Layout

Open layouts are almost standard in new construction homes, but rarely found in older homes. Homeowners with homes more than 30 years old now regularly seek open layout conversions during their kitchen/living room and whole house remodels.

Recently, the downsides of open layouts have become apparent. Noise issues and inability to find privacy can be a problem. To combat these problems, hybrid layouts with a little more separation between spaces and more obvious zoning has become a standard request. Homeowners still like large, open spaces, but may seek more walls to provide privacy when it’s needed. 

2. Layered Lighting

Being at home is best when the space is well-lit. Large windows overlooking open spaces and layered artificial lighting make home interiors more cheerful and attractive.

Lighting upgrades add value to the home while also improving quality of life. Expect to make lighting upgrades, window replacements and window installations that bring more natural light indoors. Homeowners remodeling their existing home will need coaching to help them design a functional, layered lighting system that works with their natural lighting to create an overall attractive home interior. 

3. Work from Home Spaces

Many people who started working from home two years ago are back in the office, but a large percentage of the population continues to work from home – and they may keep doing this for years to come.

As this arrangement becomes more permanent, homeowners continue to seek out functional and private work-from-home spaces, including backyard ADUs, over-the-garage apartments and backyard additions. General contractors can expect to work with homeowners to create work from home spaces.  

4. Bold Colors Mixed With Neutrals

Gray and white were the preferred colors in home interiors for years. Today, homeowners want to see more color in their interior spaces. Bold colors like deep blues, sage greens, pops of red and teal are making their way into home interiors. To accommodate this new interest in bolder colors, some builders and remodelers can improve their customer service by offering color consultations. 

Ultimately, COVID-19 has changed home design trends in clear ways. Builders and remodelers who gear their services toward these trends can continue to please customers. Staying connected with other builders and professionals in the industry can help. Exchange ideas and learn more at the next Global Exchange Events.

Construction Industry in 2022: What to look out for 

As we head into year 2 of an ongoing health crisis, it’s difficult to gauge exactly how the construction industry will fare and what roadblocks could pose potential threats or inspire innovative solutions.  

One thing is clear, as we look at the year ahead, it’s important to take time to discuss what trends we’re seeing currently and how to best pivot and be flexible — something we’re all getting better at, thanks to the ongoing aftermath of COVID.  

Supply Chain 

While there are expectations that supply chain issues will improve in some areas, it’s clear that this will continue to be a problem for “material availability and higher costs” throughout the rest of 2022. The NAHB analysis shows that cost of residential construction materials has increased by almost 19% since December 2020, a figure that will only continue to rise if policymakers do not readily address the supply chain problem.  

Material Costs & Shortages 

Inevitably supply chain will continue to impact material prices, with costs having risen by 22% in the past year alone. NAHB’s assistant VP of forecasting and analysis says, “builders are reporting shortages of cabinets, appliances, windows, roofing materials, etc.”  

Inflation & Labor 

Labor shortage and inflation continue to cause major ripples in the job market, both on the side of construction workers and home buyers. One thing is clear – companies across the board are fighting tooth and nail to offer the most attractive environment to combat a shortage of dedicated employees, specifically when it comes to higher wages and better benefits.  

While this does offer increased spending power, the 3.5-5% increase to inflation YoY (its highest since the 90’s), is undermining this so-called spending power, especially for first-time home buyers. Inflation and higher costs are offsetting what would be a boom for the economy, specifically for new home buyers.  

Affordability 

Arguably the biggest issue to keep an eye on is housing affordability and how that will affect industry growth in 2022. While all the above topics will predict and have an impact on affordability, one major indicator is mortgage rates. National Association of Realtors’ Chief Economist Lawrence Yun predicts mortgage rates to increase by 3.7% and median home prices to raise by 5.7%.  

Not that this is slowing down home buyers (yet!) Zonda’s annual survey reported buyer hesitancy decreased in October 2021 but sited an increase of mortgage disqualification during the same period.  

Industry Growth & Looking Ahead 

While many of these factors will play an important role in the construction industry this year, the forecasted projection for home sales continues to be solid, and the competitive real estate market to be maintained.  

So how can builders go about managing this fragile eco-system and be on the forefront of emerging trends and changes to the industry?  

Sources:  

COVID-19 Update: Job Growth, Inflation Risks, and Affordability Concerns: https://www.builderonline.com/data-analysis/covid-19-update-job-growth-inflation-risks-and-affordability-concerns_o 

Experts Predict What the Housing Market Will Look Like in 2022: https://www.forbes.com/sites/brendarichardson/2021/12/13/experts-predict-what-the-housing-market-will-look-like-in-2022/?ss=real-estate&sh=791fa0573942 

Home Builder Confidence Edges Lower on Inflation Concerns: https://nahbnow.com/2022/01/builder-confidence-edges-lower-on-inflation-concerns/

NAHB and NAR Economists Project What 2022 Housing Market Will Bring:  https://www.builderonline.com/money/economics/nahb-and-nar-economists-project-what-2022-housing-market-will-bring_c 

Riding the Construction Wave: Boom or bust in 2022? Perhaps both: https://www.builderonline.com/money/economics/two-industry-experts-forecast-their-predictions-for-2022_o 

New building materials reconditioning the construction industry

One year later, the construction industry emerges with new growth strategies responding to ongoing struggles of securing qualified trades prepared to meet industry demands in a competitive and regulated market.

Cost concerns remain a primary consideration for the construction as industry efficiency standards present challenges to balancing the project’s budget. The industry remains focused on the latest ground-breaking sustainable materials and advanced technology, escalating significant expenditure savings for yielding higher profits.

Closing 2020, the industry realized the need to integrate technological advancements to boost bottom-line margins. Companies relied on technology and innovative management strategies to re-invent remote office procedures preventing further disruption to the business. One of those strategies capturing the world’s attention was mobile communications, allowing daily operations to continue while management navigated through the turmoil.

Today, the following 3-year recovery indicators for the construction industry are optimistic, yet not without challenges.

Perspectives on the costs of construction materials 

According to the U.S. Trading Economicreports, sustainable materials for all construction sectors are expected to exceed more than 500 billion by 2027, with an annual growth rate (GAGR) of 10.3 percent. Driving the current economic recovery factor and projecting the growth rate are the predicted construction activity increases.

Substantiating the latest cost of construction materials is the BLS.gov, Produce Price Index, reporting the average selling price for construction goods rose 0.5 percent in February 2021, that’s an increase to January’s 1.3 percent. Market comparisons show that the U.S. experienced similar changes in goods prices 12 years ago in December 2009.

The comparison information provides a graphic picture of last year’s impact on the economy with a predictable outlook of the future. Month-to-month variances reveal the slope of the industry’s growth through economic trends and construction market demands driving the industry’s future.

Intensifying industry precautions is the cost of materials attributed to the surge of demand-driven in part by the last year’s disruption and the current construction activity ramping up to kick-start the economy. Due to high material costs, companies find it necessary to raise the cost of doing business to maintain material quality and project spending budgets, intensifying the competition.

Sustainable Construction Materials Fit Build Designs

As the industry activity returns, competition heats up, increasing the value of sustainable materials as the selection process of project awards look to ease the economic impacts and promote growth within the construction industry. During our research, we looked at construction companies achieving success through the current challenges. Granted, there are factors known and unknown impacting this achievement — we found companies incorporating sustainable materials into the construction project development plans consistently increase profitability, industry recognition, and demand.

Although industry experts believe that sustainability will make the construction industry more resilient to supply shortages and the concept still poses a question related to the access of sufficient material volumes to meet recovery project demands, especially as material trends for sustainable construction materials is expected to see double digital increases annually.

Defining the composition of sustainable materials remains essential to these building elements. The critical feature is the raw material used to manufacture the building material. Next is the life-cycle performance (endurance). Finally, the material’s disposal method is recyclable, or will it naturally decompose without any damage to the environment?

With the advancement of technology and innovative engineering, sustainable material product applications include insulation, roofing, framing, interior, and exterior. The most used construction materials are concrete, steel, and wood—each known for sustainable characteristics and robust construction build and safety strengths. Out of the three, wood prices are on the rise with new build developments for concrete and steel in process.

Rising Trends of Modular and Prefabrication

Two standard construction designs comprised of one or more of the listed product applications are fully assembled modular structures for exterior or interior use or individually fabricated subassembly components delivered to the worksite ready for installation.

Both utilize cost savings and accelerating efficiency associated with up to 40 percent of construction expenditures related to materials and site workflows. According to industry experts in both sectors, modular and prefab construction can reduce construction work phases declining projects by an estimated average of 20 percent.

Construction developers and general contractors agreed with the use of modular and prefab designs as project cost-savings and efficient timeline features. The added value is that these build designs fit construction and design concepts for in multi-family, hospitality, commercial and office location projects.

If you look upward, making good use of limited space, modular and prefab designs are scaling inner-city streets. Full modular design applications have taken on the award-winning markets, growing significantly as design enhancements for architecture projects with specific space and functions — for example, airports and hospitals. The future of U.S. construction is slated to grow based on economic conditions and the need to build better in a demanding and changing environment. As for material costs, the industry is well aware of the increase to business and the viable solutions available — it’s a matter of accepting improved alternatives and integrating management practices meeting growing demands to build quickly, on-time, and within budget.

Industry leaders, partnering and new construction developments

The past year has been challenging, yet industry leaders are optimistic about 2021 and the construction industry’s future. Today there’s a stronger sense of confidence within the industry as companies take steps to build stronger relationships with project teams and reliable industry resources while developing healthier environments and profitable bottom-lines. 

We investigated online media sources looking for industry feedback and responses from construction companies and industry suppliers, re-setting the groundwork for recovery growth during 2021. Throughout our search, we found U.S. companies assessing internal conditions through frequent interactive communications among all team levels. The outcomes identified priorities focused on safety precautions for the workforce, working strategies to keep the project sites active, and insight of construction opportunities in this changing marketplace. 

Considering the nation’s struggles, construction workers are confident and eager about getting back to work. To speed up the process, company managers have developed work-shift schedules balancing workloads to meet deadlines, prevent burnout and construction errors while maintaining a safe work environment. Project managers are working diligently with the Trades to coordinate construction schedules and avoid project delays.

The efforts pay off as the construction industry continues to hold its position as a positive economic indicator for the future. The majority of industry companies foresee a steady path through 2021, some expect to see a rise in revenues as we reach the third quarter, and very few expect a decline to the current project opportunities.

Looking at the segment forecasts for the construction activity in 2021, shifts in project activity affecting revenues between industry companies may be due to development locations, industry trends, and project pricing structures as the industry’s competition gains strength.

IN THE NEWS

Here’s a preview of what the construction industry can expect — private, public, and specialty service companies shared their experiences, resolve and expectations of moving forward after the pandemic. Although uncertainty remains, these leaders are focused on safeguarding the workforce and securing the company’s industry position for building a better tomorrow.

Navigating Business through Pandemic Disorder — Suffolk Construction, West Coast Region

Business Observer, March 19, 2021 — Mark Gordon, managing editor, talked with Jose Christensen, general manager, west coast region for Suffolk. Like most companies, safety was a prime concern to keep job site activities operating. Company solutions included social distances, adjusted work shifts, and temperature verifications for all workers. Christensen commented on the “sense of community, and everyone looking out for each other — to keep people healthy and that they wanted to work.” Excellent news for the company, projects continued with only one slowing down.

Company’s Response to Recovery — LGE Design Build, Phoenix, Arizona

AZ Business Magazine, November 5, 2020 — Covering Business News, Michael Gossie writes about David E. Sellers, president, and CEO of LGE Design Build and his experience with COVID-19. Sellers talked about the importance of developing a contingency plan that responds to the ongoing business changes to minimize the internal disruption, so the business can continue. The first issue of concern was the workforce’s health and well-being. LGE has taken all the precautions to maintain a clean and safe environment. LGE is a private company located in Phoenix, Arizona. Sellers’ outlook for LGE and the construction industry is positive, with expectations of growth in 2021. 

Construction Business and Markets Impacts Gaylor Electric, Indianapolis, Indiana

Construction Dive, May 28, 2020 — Jenn Goodman reported on the effect of COVID-19 within the construction industry, interviewing Chuck Goodrich, president and CEP of Gaylor Electric. Based in Indianapolis, the company has construction projects in 27 states. Goodman says,” they’ve been lucky to maintain backlog projects valued at over $200 million.” He added, “30 percent of the laid-off workforce are now back at work.”

Construction Supply Chains Deliver On Time — Gilbane Building Company, East Coast

For Construction Pros, May 6, 2020 — Becky Schultz, editor, shared comments from Joseph Piro, vice president, corporate director, and supply chain management of Gilbane Building Company, confirming shipment delays for essential construction materials continue to be minimal for now. He says, supply chain management has taken the time to develop inventory strategies to respond to the construction industry challenges. One solution within the business arena is a diversified supply base. If one supplier runs short, there’s a second in place to meet the demand. 

We want to thank each source for the informative and motivational content originally published and have included a direct link to who is solely responsible for its content. We chose each content to provide a real-life industry awareness of company challenges and how they addressed the COVID-19 impacts to reach recovery milestones. Readers can see the interview dialogues with a simple click to the originating source.

Material Shortages and Higher Costs Have Slowed Down New Home Sales in 2021

New home sales took an unexpected hit in the month of February in spite of increasing demand for single-family homes, dropping 18.2% from January’s numbers. Nevertheless, industry experts say they aren’t concerned about the housing market’s long-term fundamentals and have attributed this dip in sales to short-term factors such as rising lumber costs and material shortages. In this article, we’ll take a detailed look at the factors that have attributed to this recent drop in new home sales as well as discuss the housing market’s outlook for 2021. 

High Demand, Limited Supply 

After taking a look at February’s drop in new houses being built, one might assume that demand for new housing has taken a dip as well. However, housing starts are still up 30% year over year – and while February’s housing starts did drop 10.3% from their January total, demand for new housing is still high. 

By and large, the factors causing new home sales to slow have much more to do with limited supply than slowing demand. In 2020, many mills were forced to either slow or halt production in order to comply with the new regulations and guidelines that were put in place due to the COVID-19 pandemic. At the same time, mill operators and lumber companies alike both drastically misread the market in 2020 and failed to predict the unexpected housing market boom that began last year. As this housing market boom has continued into 2021, mills and lumber suppliers have struggled to keep up with demand, leading to material shortages and skyrocketing costs. 

In February, softwood lumber prices reached a point that was 110% higher than their highest point in February of 2020. These higher lumber prices have added a total of $16,000 in extra cost to the average price of a newly built home and have undoubtedly encouraged many would-be homeowners to hold off on their plans to build a new house. At the same time, though, even builders who have found clients who are willing to bear these higher costs are still struggling to procure the materials they need, and many builders whose services were still in high-demand last month weren’t able to meet that demand due to material shortages. 

The Housing Market’s Outlook in 2021 

While the issues of soaring lumber prices and limited supply are certainly troublesome for many builders and home buyers alike, the outlook for the housing market going forward is still optimistic. It’s worth noting that in spite of the substantial dip in new home sales that we saw in February, the February 2021 numbers were still 8.2% higher than they were in February 2020 – an impressive figure considering the fact that the economic effects of the coronavirus pandemic had barely begun to make an impact in February of 2020. 

While sales have indeed slowed more than expected so far this year, the materials shortages and high lumber costs driving this dip in sales are considered to be short-term issues that will largely resolve themselves in the coming months as suppliers ramp up production in order to meet demand. Realtors are also optimistic that the continued rollout of the COVID-19 vaccine will ease some of the seller apprehensions regarding the coronavirus and further improve supply. Demand for new homes is expected to continue growing throughout 2021 as well, thanks in large part to the fact that the millennial generation is just now entering its prime home-buying years; according to the National Association of REALTOR’s Home Buyers and Sellers Generational Trends Report, millennials now make up 38% of the nation’s home-buying population and are expected to continue driving demand for new homes throughout the near future. 

All of this is to say that February’s drop in new home sales does not seem to be any reason for long-term concern, and the housing market’s fundamentals remain as strong as ever. While the high cost and low availability of lumber is certainly an issue for builders who have seen their operations slowed in spite of record-high demand, it shouldn’t take long for production to catch up. As the world slowly returns to some sense of normalcy and suppliers work overtime to make up for their missed projections, builders should soon be able to enjoy a market where supplies are readily available and the demand for their services is high.