URGENT UPDATE: The Pennsylvania construction industry is experiencing a significant downturn, with contractors like Greg Harris, owner of G.P. Harris Construction, Inc., in Jonestown, reporting a sharp decline in major home remodeling inquiries. This unsettling trend reflects a broader national decline in construction spending, alarming builders across the state.
Officials confirm that as of September 2024, the median home price in Pennsylvania has held steady at $299,900, marking a 3.4% increase compared to the previous year. The combination of soaring interest rates, inflation, and economic uncertainty has caused potential customers to hesitate in committing to large projects. “It just seemed to be [people] lost the confidence to spend large amounts of money,” Harris stated, reflecting a sentiment echoed by many in the industry.
The Associated General Contractors of America reports a troubling trend: for the first time since 2021, fewer than half of the nation’s metropolitan areas added construction jobs between August 2024 and August 2025. “Construction employment has stalled or retreated in more areas as owners pull back on projects in the face of higher costs,” warned Ken Simonson, the association’s chief economist.
The impact is being felt across various sectors, from commercial build-outs to essential home repairs. Brian Miller, a designer at EXCEL Remodeling in Lemoyne, noted that while the company has many bathroom projects lined up, more complex kitchen remodels are declining. “It’s been challenging, to say the least,” Miller remarked, indicating that their traditional backlog of eight to ten weeks has diminished significantly.
The slowdown is unprecedented. Harris recalls a time when construction thrived even during the 2008 housing crisis, stating, “It has not been like anything I have ever experienced.” Mike Klinepeter, president of Pyramid Construction in Wormleysburg, shares this sentiment, noting that securing financing for projects has become increasingly difficult. “It just feels like a very prolonged, extended process,” Klinepeter explained, highlighting the challenges of navigating municipal building permits that vary widely across Pennsylvania.
In response to these issues, Harris, who is set to become president of the Pennsylvania Builders Association, revealed that efforts are underway to streamline the permit process and ease regulations, which could help expedite construction projects. However, builders are facing a myriad of challenges, including inflation, leading many customers to postpone home improvement projects.
The rising costs of materials, influenced by tariffs and inflation, have compounded the situation. Since 2020, construction prices have surged by 18%, with the U.S. Commerce Department imposing a 10% tariff on timber and lumber imports and a 25% tariff on kitchen cabinets and furniture earlier this month. Harris noted, “The excessive funds dried up, and people couldn’t swallow that price increase.”
Interest rates are also playing a crucial role in the slowdown. Currently, the benchmark 5-year $30,000 home equity loan sits at approximately 8.13%, deterring many homeowners from financing remodeling projects. Although the U.S. Federal Reserve recently cut interest rates by 0.25%, this is only the first of two anticipated cuts for the year, leaving many uncertain about future financial conditions.
As construction companies grapple with these challenges, the timeline for recovery remains unclear. Klinepeter anticipates that 2026 may mirror 2025, but with additional complexities stemming from the potential federal government shutdown and Pennsylvania’s budget impasse affecting project funding.
Despite the current difficulties, both Klinepeter and Harris hold onto a glimmer of hope. “They say 2026 is going to be a good year in the remodeling world. Hopefully, the interest rates come down,” Harris concluded, expressing cautious optimism in the face of adversity.
As the situation unfolds, homeowners and builders alike are left watching closely for signs of improvement in a market that is critically important to the state’s economy.
