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While labor availability has improved in the past year, shortages in skilled labor continue to impact both project costs and timelines, according to the Q2 2023 U.S. Houzz Renovation Barometer. Approximately 79% of businesses surveyed by Houzz reported “moderate to severe” labor shortages in the second quarter of 2023, an improvement from 91% of respondents during hte same period last year.

Houzz says the decrease in businesses reporting labor shortages may reflect an overall decline in business activity levels. New committed projects reported at the start of the year have decreased by five index points relative to the third quarter of 2022, according to Houzz.

During the second quarter, 42% of industry professionals reported moderate to severe shortages of carpenters, an improvement from 56% in 2022. Over a quarter of respondents reported shortages of electricians, plumbers, cabinetmakers, and framers, though all represented an improvement from labor conditions in the second quarter of 2022.

While labor shortages are improving, the impact of insufficient labor is being felt in relation to both project cost and length. Due to shortages in skilled labor, 81% of professionals reported an increase in project costs, 72% reported an increase in subcontractor compensation, and 71% reported an increase in project length. To help mitigate the impact of labor shortages, more than half of the respondents to the Houzz survey indicated they are offering on-the-job training to new hires, and more than 40% reported using social media as a tool to advertise job openings.

In addition to labor concerns, nearly half of the businesses surveyed by Houzz reported moderate to severe shortages of products and materials. Shortages of copper and brass (47% of businesses reported shortages), lumber or plywood (46%), drywall (40%), and aluminum (40%) were most common. More than three in five businesses reported delays in shipment of copper and brass, lumber or plywood, drywall, aluminum, siding, cement, steel, plastic, and insulation, according to Houzz.

Professionals reported the need to adjust project timelines to accommodate difficulties in material acquisition. Cabinetry, indoor furniture, outdoor and indoor doors, and lighting fixtures were the projects most commonly impacted as a result of shortages and delays, according to Houzz.

The Houzz Renovation Barometer tracks market expectations, project backlogs, and recent business activity among firms in the construction and design services sector. The Q2 2023 Barometer generated responses from approximately 1,547 businesses.