We are still well above pandemic lows with regards to contractor confidence and we’ve seen stability in the overall confidence of contractors in the past few months.  This is in line with other measures such as the NAHB Builder Confidence Index, which has been slightly declining in recent months.

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Perhaps the most noticeable change is in the expectations for next 12 months of revenue, where we have a drop from Q4-21 to Q1-22 across all categories. This trends where contractors are seeing decreased average revenues per project has been occurring for several years. In Q1-22, there is a higher proportion of contractors reporting lower average revenues per project compared to the number reporting increased average revenues per project.

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This may be due to the past 12 months being so strong, their inability to take on much more, and the increased price pressures they are facing.

This is also reflected in the decline in business activity for Q1 of 2022.  Keep in mind, that Q1 reflects the heart of winter/cold months in many parts of the country.  In many cases, it’s important to compare the metrics YOY not quarter over quarter.  For Q1 2022, we are at or above Q1s pre-Covid, in 2020 and prior.

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Quality and Volume of leads remains at or slightly above the norm, which is a great sign for future activity. 

While labor is a challenge, confidence in having labor available to get work done is higher than normal. Signs for contractor activity are positive given their project lead times; at present start times for most contractors are averaging in the 5 to 7.5 week range.

We expect demand for contractors to tick up in the coming months as warm months return and demand remains high.  The biggest factor that we should look out for is a decrease in homeowner demand due to high prices (materials, labor, inflation).

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Starting in Q1 of 2022, The Farnsworth Group will also be measuring, on a quarterly basis, additional market pressures that contribute to contractors' abilities to successfully operate their business. These additional market pressure include:

- Credit Availability

- Future Capacity

- Material Availability

- Material Cost Stability

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To review the full report with detailed data sets, download the latest quarterly update of The Farnsworth Contractor Index for Q1 of 2022.

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