SPRAVACHAT
SPRAVA WEEKLY · ISSUE 01

RESIDENTIAL
CONSTRUCTION
WEEKLY

Week of July 6, 2026

The Monday brief for residential general contractors. Housing data, material costs, labor, and the money-making moves that matter this week.

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−15.4%
Housing starts, Apr→May
+0.9%
Remodeling spend, monthly
25–30%
Effective tariff on construction goods
+23%
Aluminum, year-over-year
THIS WEEK

WHAT'S HAPPENING
IN THE INDUSTRY

New construction cooled off in May. The Census Bureau's latest report (released June 16) shows housing starts fell 15.4% from April to a seasonally adjusted annual rate of 1.177 million, with single-family starts down slightly to 882,000. Building permits held roughly flat at 1.413 million, and single-family permits actually ticked up 0.6% — a sign builders are still lining up future work even as they pull back on breaking ground right now. Completions dropped too, down 8.1% from April and 14.2% year-over-year.

The bright spot is remodeling — up 0.9% for the month and 8.1% for the year.

Per NAHB, residential improvement spending was the only residential category to post a monthly gain. While new-home construction stalls, homeowners are clearly still spending on renovations, additions, and repairs.

Labor: a mixed bag

Construction job openings rose from 266,000 in April to 298,000 in May, per the latest JOLTS data, but NAHB notes that gain is being driven by nonresidential work (data centers, in particular) rather than housing — residential demand for labor is still soft. The layoff rate in construction also ticked up to 2.1%, while the quits rate fell to 1.3%, suggesting workers are hanging onto the jobs they have rather than jumping ship.

Materials: the headwind

Material costs remain the biggest headwind. Tariffs have pushed the effective rate on construction goods to a 40-year high of 25–30%, with steel up 13% and aluminum up 23% year-over-year. Overall material costs are up another 5–7% on top of already-elevated post-pandemic prices, and lumber rose 6.1% in Q1 alone (though it's still down 3.8% from a year ago).

Demand

Consumer confidence inched up as inflation fears eased slightly, but affordability concerns are still pushing new-home sales lower. NAR's chief economist is nonetheless optimistic about the back half of 2026, pointing to strong business investment in AI and data centers as a reason the broader economy should avoid recession.

THE TAKEAWAY

New-build is soft, material costs are punishing, but remodeling and repair demand is quietly growing. Contractors who can flex toward renovation work — and who tighten up pricing discipline to survive thinner margins — are the ones positioned to have a good back half of the year.

PLAYBOOK

MONEY-MAKING
MOVES THIS WEEK

Seven concrete things to do before Friday.

  1. 01

    Chase the remodeling wave, not just new-build.

    Remodeling spending is the one residential category growing right now. If your crews can pivot toward additions, renovations, and repair work, you're fishing where the fish are instead of competing for a shrinking pool of new-construction bids.

  2. 02

    Know the difference between markup and margin — it's costing contractors real money.

    A 20% markup on costs only produces a 16.7% margin, not 20%. Confusing the two is one of the most common reasons contractors underprice bids across dozens of jobs a year. Before you set prices, know which number you're actually targeting.

  3. 03

    Track job costs in real time, not after the job's done.

    Contractors who track actual costs against estimates as the job progresses see 15–25% better margins than those who wait until completion to find out whether a job was profitable. If you don't know a job's real numbers until three months later, you're guessing, not managing.

  4. 04

    Use group purchasing power to offset tariff pain.

    With material costs up 5–7% industry-wide, contractors using group purchasing organizations are still landing 5–7% savings on annual material spend — for a contractor buying $2 million a year in materials, that's $100,000–$140,000 straight back to the bottom line. Worth checking if a regional or trade-specific buying group serves your area.

  5. 05

    Specialize instead of competing purely on price.

    General contractors average 5–6% net margins; specialty trade contractors average 6.9–8.5%. Niching down lets you compete on expertise rather than being the low bidder in an increasingly crowded field — useful right now, since total construction spending is down roughly 3% year-over-year and more contractors are bidding on fewer jobs.

  6. 06

    Audit your overhead before you audit your prices.

    A healthy overhead ratio runs 8–15% of revenue. If yours has crept above that during a growth period (extra admin staff, bigger shop, new software), that's often the real margin leak — not your pricing.

  7. 07

    Don't let change orders and slow collections quietly eat your profit.

    Every unbilled change order is margin you earned and gave away. And with payment delays of 45–60 days now standard, an average collection period past 45 days is a signal to tighten your AR policy before cash flow problems force you into low-margin work just to keep the lights on.

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