Residential Building Contractors NAICS 2361

Aug 18, 2025 - Homebuilders Slow to Adopt AI

• Most single-family homebuilders have yet to leverage artificial intelligence, according to a recent survey by the National Association of Home Builders (NAHB). Among 12 categories of AI use, there was significant adoption in just two. One-fifth of builders surveyed said they used AI to generate advertising and marketing materials, and 11% use AI to help analyze markets and plan projects. Other uses, including project design, safety monitoring, managing production and scheduling subcontractors, and permitting had use rates of 3% or less. Builders not using AI were asked to rate which uses they were most likely to adopt in the next two years using a scale of 1 (not at all likely) to 5 (very likely). Generating advertising and marketing materials, and help analyzing markets and plan projects had the highest likelihood ratings – 3.6 and 3.0, respectively. The other 10 AI uses had likelihood ratings of 3.0 or less.
• The Trump administration’s proposed $27 billion cut to federal rental assistance programs—amounting to a 43% reduction—has triggered concern across the affordable housing sector, stalling projects and shaking lender confidence, according to The Wall Street Journal. Some developers have halted construction due to postponed Section 8 subsidies, while lenders cite uncertainty over HUD funding as a significant deterrent. Although the House Appropriations Committee rejected the overhaul, HUD continues lobbying for the cuts, which would slash its budget by 44%. Critics warn that the move could destabilize the housing system, jeopardizing billions in multifamily loans and undermining gains from recent tax law changes that expanded the Low-Income Housing Tax Credit. Despite these incentives, developers argue that new affordable units may lack the operating revenue to remain viable without voucher programs.

• Home builder confidence in the single-family market dropped in August for the 16th consecutive month amid high mortgage rates, weak buyer interest, and elevated builder financing costs, according to the National Association of Home Builders (NAHB). Home builder sentiment, as measured by the NAHB/Wells Fargo Housing Market Index (HMI), fell one point to 32 in August 2025. Any HMI reading over 50 indicates that more builders see conditions as good than poor. The HMI survey also showed that 37% of builders reduced home prices in August to lure potential buyers off the sidelines, although the average price reduction of 5% has remained unchanged since November 2024.
• Home remodeling spending growth is expected to remain flat in 2025 and the first half of 2026, according to the Leading Indicator of Remodeling Activity (LIRA) report by the Joint Center for Housing Studies at Harvard. Homeowner improvements and repairs are expected to increase 2% to $509 billion in the third quarter of 2025 compared to Q3 2024. In the fourth quarter of 2025, remodeling spending will rise quarter-over-quarter to $511 billion, up 1.8% from Q4 2024. Spending will increase to $524 billion in Q1 2026, up 2.2% from Q1 2025. In the second quarter of 2026, year-over-year spending is forecast to rise 1.2% to $518 billion. Joint Center expects a weak housing market to put downward pressure on remodeling spending. However, recent federal cuts to incentives for efficiency improvements may spur short-term growth as homeowners make upgrades before benefits expire at the end of the year.