Businesses that serve the homebuilding industry are starting to feel the ripple effect of a slumping housing market.
Take architect Layne Bennett, owner of JVL Associates Inc. in Westminster, who has seen his revenue drop about 25 percent in the past year. The company’s three largest clients are production builders Ryland Homes, Continental Homes and Advocate Homes.
Nationally, new-home sales in July tumbled 4.3 percent from June to an annualized pace of 1.07 million, according to a Census Bureau report. National sales of existing homes and condos dropped 4.1 percent in July from June and 21.6 percent year-over-year, according to a report from the National Association of Realtors.
“We’ve just gradually gotten less and less work,” Bennett said. “They’re not selling their houses, so they’re not building more, and they’re not developing new products.”
The slowdown has forced Bennett to cut his advertising budget from about $100,000 last year to $40,000 this year.
“I just don’t have the money to do it,” he said.
Suppliers to the homebuilders also are seeing a dip in business. Steve Walters of Bel Shower Door Corp. said business is down about 4 percent from last year. The company typically has relied on the homebuilding industry for about 90 percent of its business. Now it is ramping up sales efforts in other areas, Walters said.
“More than one major builder has brought in its subcontractors and asked the question of what we can all do to lower expenses,” he said. “With the market slowing, the prices of homes have to come down. They have to lower expenses because their margins aren’t huge.”
But Walters said there’s little his company can do because the large builders already are getting low prices.
The slowdown has created a bright spot in the remodeling industry.
“Maybe that’s because people aren’t moving and are choosing to invest and stay where they are,” said architect Doug Walter.
Construction employment in Colorado has remained fairly flat this year, but that’s due more to a slowdown in civil construction such as the T-REX project than to declines among homebuilders and specialty trades, said Joseph Winter, a senior economist with the Colorado Department of Labor and Employment.
“I haven’t seen a decline in construction employment in the month-to-month numbers. It is harder to see in the summer because you are always going up. Even in bad years, you have more construction in the summer,” Winter said.
But Jim McFarland, a foreman for STK Framing at a KB Home development at Stapleton, said he has noticed there isn’t as much work available to the trades as there was a year ago.
“It was hard to get help a year ago,” he said. “Now, there are more people running around looking for work.”
It’s pushing many workers from the homebuilding industry into commercial construction jobs, said Jim Gleason, executive secretary and treasurer of the Mountain West Regional Council of Carpenters. That drives wages down, as more workers are paid in cash.
“It’s lowering standards on commercial projects,” Gleason said. “My fear is that conditions will get worse as far as hiring illegal subcontractors and lowering standards.”
Should home construction employment slow significantly in the metro area, workers might be able to find employment in Pueblo County, where a power plant is being built and the Pueblo Ordnance Depot is being dismantled.
High energy prices have contributed to stronger activity on the Western Slope, especially in Mesa, Garfield and Rio Blanco counties, Winter said.
Staff writer Margaret Jackson can be reached at 303-954-1473 or mjackson@denverpost.com.
