Feast or Famine; Home Builders now Face Labor Shortages

Residential home builders are reporting that a lack of available labor is hampering new home construction the National Association of Home Builders (NAHB) said today.  The worker shortage is evident in most of the trades.

Homebuilders responded to a survey by NAHB with more than half reporting they had encountered labor shortages over the last six months that have caused them to pay higher wages or subcontractor bids and consequently raise the price of completed houses.  Forty-six percent said they had experienced delays in completing projects, 15 percent had to turn down work, and 9 percent lost or cancelled sales because they could not find appropriate help.

"The survey of our members shows that since June of 2012, residential construction firms are reporting an increasing number of shortages in all aspects of the industry - from carpenters, excavators, framers, roofers and plumbers, to bricklayers, HVAC, building maintenance managers and weatherization workers. The same holds true for subcontractors," said NAHB Chief Economist David Crowe.

NAHB estimated that more than 1.4 housing jobs disappeared during the peak of the downturn. Many construction workers found other employment while some trades retrained construction workers and they are not returning to the residential construction sector.

"What used to be high-paying, skilled jobs vanished as builders across the nation went out of business or were forced to let workers go," said NAHB Chairman Rick Judson.  

NAHB is trying to help meet the demand for skilled labor by providing career training and job placement in conjunction with the Home Builders Institute (HBI).  HBI offers an array of portable pre-apprenticeship training programs in a variety of skilled trades that can be customized to meet the workforce needs of communities across the nation.

"We are ramping up our efforts to train diverse populations and place them in jobs to meet the growing demand of the building sector," said HBI President and CEO John Courson.

A lack of buildable lots and increased costs for materials and labor are also contributing to the problem, as the infrastructure that supports home building moves to re-establish itself following the worst housing downturn since the Great Depression, Crowe said.

The problems confronting builders are also hurting job and economic growth. NAHB says the construction of 1,000 single-family homes generates more than 3,000 jobs, approximately $145.4 million in wages, and more than $89 million in federal, state and local tax revenues. That doesn't even count the increase in annual property taxes that local municipalities rely on to fund schools, police and firefighters.

As the economy mends, pent-up demand for housing will continue to grow as roughly 2 million household formations were delayed as a result of the Great Recession. In normal economic times, demand for new homes should be about 1.7 million annually.

"We need to look holistically at the home building infrastructure to meet growing and future demand," said Judson. "To avoid a run-up in prices in hot markets due to labor issues, we need to complement our current training programs with a market-based visa system that would allow more immigrants to legally enter the construction workforce each year when there is a dearth of workers to fill the jobs that are needed."