The Construction Economy in 2024 and Beyond

As 2024 comes to a close, the residential construction industry is in a state of flux. High interest rates, affordability crises, and labor shortages are the big challenges, but there are opportunities for those who are willing to adapt. At Bolster, we know that to stay competitive, you need a mix of strategic planning, operational efficiency, and technological innovation. Let’s dive into the trends that are shaping construction as we head into 2025 and how your business can succeed in these uncertain but exciting times.

Challenges and Silver Linings

So Far: A Tough Year

The residential construction industry went into 2024 with several big challenges:

• Recent high interest rates made borrowing more expensive, and the demand for new housing has slowed. 
• Labor shortages stretched out project timelines and increased costs for small to medium-sized businesses.
• Housing affordability crises locked out many first-time buyers from the market and narrowed the customer base for residential construction.

But there are signs of change:

• Unemployment rose to 4.3% by mid-2024 as the tech sector shed jobs, while construction employment remained flat.
• Inflation is coming down, and interest rate relief could be as early as late 2024.

This is a mixed but hopeful picture where challenges remain but opportunities are opening up for proactive builders.

Housing Market Resilience

Despite the economic uncertainty, the housing market has held up surprisingly well, thanks to:

• Low delinquency rates: The delinquency rate on single-family residential mortgages is at an all-time low, and homeowners are financially stable.
• The housing affordability index is improving: While affordability is still a challenge, the metrics show households are better equipped to manage housing costs than they were in previous years.
• Consumer spending is still strong and driving demand for renovations and new builds.

These signs show the market has been under pressure but still has opportunities for builders who can adapt.

What Lower Interest Rates Mean

As we head into 2025, interest rate relief is a double-edged sword for residential construction businesses.

Rate Cuts Opportunities

• New housing demand: Lower borrowing costs will bring more buyers into the market, especially those who have been waiting on the sidelines.
• More project volume: Builders will have more opportunities as new builds and renovations pick up.

Challenges to Overcome

• Rising prices: Increased demand will drive up prices, and affordability will be a problem for first-time buyers.
• Speculation: Lower rates will encourage speculation, and the market will inflate.
• Volatility: Builders need to plan for material and labor cost fluctuations as demand shifts.

For builders, it means growing while being strategic with pricing, project selection, and resource allocation.

Regional Construction Trends: Two Worlds

The residential construction market is not one size fits all. Regional differences in policies, land availability, and economic conditions have a big impact on local markets.

Texas and Florida: Proactive Policies and Growth

Texas and Florida have seen a big increase in housing supply due to:

• Simplified construction policies: easier permitting and reduced regulatory barriers.
• Land availability: More land to build on has allowed developers to meet demand.

This has resulted in:

• Stabilized prices, some relief for home buyers.
• Balanced markets where supply and demand are more in sync.

High Growth States Challenges

But even in states with more housing supply, builders are facing rising insurance costs due to natural disasters. Hurricanes, floods, and other acts of God have driven up premiums and the cost of homeownership and construction. Builders in these regions need to factor these risks into their pricing and planning.

Adapting to Change: What Builders Need to Do

To succeed in a changing market, residential construction businesses need to focus on three key areas: efficiency, partnerships, and technology.

1. Technology for Operational Excellence

Technology is no longer a nice to have for builders; it’s a must-have. Tools like Bolster’s construction estimating software can help:

• Accurate job costing: Bolster’s AutoCost estimates reflect real-world costs so you don’t have overruns that maximise profit.
• Centralized project management: Manage schedules, resources, and progress from one platform, and keep your team aligned and informed.
• Data-driven insights: Bolster’s analytics gives you insights into project performance so you can make informed decisions and optimize.

By automating repetitive tasks and improving accuracy, Bolster allows businesses to take on more work with more confidence and efficiency.

2. Build Supplier Partnerships

Material costs are the most volatile part of residential construction. Building long-term relationships with suppliers can:

• Get you better pricing agreements.
• Access bulk discounts and rebates during periods of high inflation.
• Guarantee material availability and reduce supply chain delays.

Bolster makes this easier with integrations that connect builders with suppliers to increase efficiency and cost savings.

3. Invest in Your People

The labor shortage is a challenge, but businesses that invest in their teams will stand out. Good communication and collaboration is key to keeping morale and productivity high. Bolster’s tools give real-time updates and seamless coordination between contractors, subcontractors, and clients to keep projects on track.

2025 Ahead

• A softening labor market and easing inflation mean's a better economic environment.
• Interest rate relief could release pent-up demand and new opportunities for builders.
• Regional variations will continue, so you need to have local solutions for local problems.

For builders, the message is clear: be adaptable and plan ahead. By using technology, streamlining, and building partnerships, businesses can not only navigate uncertainty but thrive in the long term.

Why Bolster Is Your Competitive Advantage

At Bolster, we know what it’s like to be a residential contractor. Our construction estimating software helps you:

• Get accurate estimates: Win more jobs and reduce mistakes with Bolsters AutoCost real-world job costing.
• Streamline project management: Keep everything about your projects in one place.
• Improve communication: Build trust and satisfaction with seamless collaboration.
• Optimize finance: Monitor expenses, manage invoices, and profit even in tough economic conditions.

Get Started

As the industry changes, you need the right tools and strategies. Bolster is here to support your business every step of the way. Whether you’re dealing with rate cuts, regional variations, or shifting demand, we’ll help you build faster, smarter, and more profitably.