Residential Remodelers NAICS 236118

Sep 15, 2025 - Weak Housing Demand, Supply Glut Sends Lumber Prices Lower

• Remodelers may experience some margin relief as lumber prices drop. Lumber futures have plunged 24% since early August, signaling economic caution amid trade uncertainty and a weakening housing market, according to The Wall Street Journal. A glut of wood - stockpiled in anticipation of higher tariffs on Canadian imports - has collided with softening demand, prompting major producers like Interfor and Domtar to curtail output. While high lumber prices during the pandemic stemmed from inflation and supply chain strain, current declines result from reduced construction activity and tariff volatility. Residential building permits and construction spending are down, but falling mortgage rates may revive demand. Analysts warn that further production cuts are likely as the market adjusts to oversupply and shifting trade dynamics.
• Nearly a third of US construction firms have been impacted by intensified immigration enforcement in the last six months, according to a recent report by the Associated General Contractors of America (AGC) and the National Center for Construction Education and Research (NCCER). More stringent enforcement has slowed project delivery and left 88% of firms with craft worker vacancies. One-fifth of construction firms surveyed reported that subcontractors had lost workers, 10% reported increases in absenteeism due to actual or rumored enforcement actions, and 5% said jobsites had been visited by immigration agents. Only 10% of firms use visa programs like H-2B due to approval challenges, leaving many vulnerable to enforcement actions. Industry leaders are urging Congress to increase funding for career and technical education and to create a construction-specific visa program to stabilize the workforce and support long-term growth.

• 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.
• So far in 2025, small investors are playing an outsized role in the U.S. single-family housing market, according to The Wall Street Journal. In the first half of 2025, small investors accounted for about 25% of home purchases, outpacing large institutional buyers, according to property analytics firm Cotality. While traditional home buyers remain sidelined by high home prices and interest rates, small investors are capitalizing on seller incentives. Unlike large firms constrained by institutional reporting, smaller investors can take greater risks and are increasingly targeting mid-priced homes to renovate and rent. An uptick in the percentage of homes sold to small investors could boost demand for residential remodeling as investors buy and fix up homes for flipping or renting.