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By Mae Anderson

The Associated Press

NEW YORK 鈥� The chill in the housing market is rippling out to the carpenters, landscapers and other small business owners who lose out when fewer homeowners choose to renovate their properties.

Inflation was already causing some homeowners to delay big projects as prices for building materials, fixtures and appliances jumped. More recently, higher mortgage rates have put a damper on the number of homes being sold.

At the beginning of the year, carpenter Bill Albritton, who has owned Albritton Custom Carpentry near Charlotte, N.C., since 2004, was booked months in advance and completing full custom kitchen cabinet replacements in homes in Charlotte鈥檚 historic districts. But he鈥檚 seen a slowdown over the past two months.

In the Charlotte metropolitan area, the number of homes sold fell 19 percent between June and July, according to the RE/MAX monthly National Housing Report. The number also was down about 21 percent from July 2021.

Albritton is booked out 30 days in advance, compared to the usual 90 to 160 days. Meanwhile, his costs have gone up by more than 30 percent across the board. Plywood he uses jumped from $72 per sheet to $140 per sheet around Christmas. It has since dropped to $85 a sheet, but that鈥檚 still higher than it used to be. And he has trouble finding hinges at any price.

Albritton is trying to pivot to smaller carpentry jobs.

鈥淚nstead of doing new kitchens we鈥檙e gearing up to do what we call 鈥榢itchen face-lifts,鈥欌�� he said.

That means just replacing the fronts of cabinets and drawers and teaming up with another contractor to paint the cabinets. It gives 鈥渁 new kitchen look for a fraction of the price,鈥� he said.

The Federal Reserve has been raising interest rates to reduce inflation, which is running at almost 10 percent annually at the wholesale level. The fear is the Fed will go too far and the economy will go into a slump.

鈥淚 am very worried on the heels of the material shortages we have been battling to now look at a very possible recession,鈥� Albritton said.

He鈥檚 reaching out to other home renovation companies to partner with as one way to keep the work coming.

The average rate for a 30-year mortgage is 5.55 percent, according to Freddie Mac. A year ago, the average was 2.87 percent. The increase is forcing some would-be buyers out of the market. Meanwhile, sales of previously owned homes have fallen for six straight months. That matters to the businesses involved in home renovations because a seller can spend thousands of dollars making a house more attractive, and then a buyer can spend thousands more personalizing it.

Growth in homeowner spending for improvements and repairs is expected to be 17.4 percent this year, but slow to 10.1 percent by the second quarter of 2023, according to the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University.

Chris Doyle, CEO and co-founder of Billd, a construction finance company, said small businesses should be aware of what鈥檚 going on in their market and consider pivoting to different types of projects. A small business previously focused on new-home construction should try to work with renovators instead, for example. And since homeowner spending is set to decline, federal construction projects might also be good alternatives.

鈥淓veryone鈥檚 going to have to adapt,鈥� he said. 鈥淪mall businesses have an opportunity to adapt quicker since they鈥檙e more nimble than bigger companies.鈥�

Daniel Edwards, who owns a Handyman Connection franchise in Hanover, Massachusetts, focuses on small jobs that are several thousand dollars, like building decks, swapping out windows, and installing doors. In the Greater Boston area that includes Hanover, home sales in July were down 20 percent. The median price of a home sold was $650,000, down 2 percent from June but up 8 percent from this time last year, according to RE/MAX data.

Edwards said he鈥檚 normally booked out three or four weeks with jobs, but lately it鈥檚 been two to three weeks. He says customers are being tighter with money: They want smaller jobs, want to look at receipts, and question the price of materials. For example, one customer decided to install a toilet paper holder himself, rather than paying someone to do it, saving about $25, he said. Another customer who requested a quote for a gutter cleaning decided to hold off. But while business has been slower, he says the dip isn鈥檛 as bad as he was worried it might be.

鈥淚 certainly don鈥檛 see normal July and August levels, but I don鈥檛 see what I had feared in terms of significant decline. People still want small- to mid-sized projects,鈥� he said.

Inflation has challenged Tom Monson鈥檚 business, Monson Lawn & Landscaping, in St. Paul, Minnesota. He鈥檚 had to raise prices 鈥� he now charges $62.50 to mow a lawn, up from $50. A sod installation costs $1,250, up from $1,100.

More price-sensitive customers have cut back. One customer who was planning to put in a new lawn decided to wait until next year, and others have cut back from biweekly landscaping appointments to monthly.

Curbio is a startup that provides pre-sale home renovations that it doesn鈥檛 charge for until homes sell. It operates in 52 markets across the country, from Chicago to South Florida. The company has started offering smaller projects as the housing market slows.

鈥淎s the market starts to cool in some areas, there鈥檚 much more sensitivity to timelines,鈥� said Olivia Mariani, vice president at Curbio. 鈥淏efore, a homeowner may be willing to wait 8 to 12 weeks to fully gut and remodel their kitchen. Now, they鈥檙e asking for the minimum viable work.鈥�

So instead of doing a full renovation, Curbio has begun shifting project types to more 鈥渞efreshes鈥� 鈥� like painting cabinets or refinishing hardwood floors. It dropped its prior $15,000 minimum price for projects; now, 30 percent of its projects are under $15,000.

Curbio鈥檚 data shows that a cabinet refresh can help raise the price of a home for sale just as much as a bigger job, Mariani said.

鈥淏uyers just want a home that doesn鈥檛 require maintenance 鈥� a full cabinet redo is not really necessary,鈥� she said.