The Surprising Problem That’s Holding Back the Housing Market
One reason that tight inventory continues to constrain the U.S. housing market is that homebuilders are having trouble finding enough workers to meet their needs.
The cost and availability of labor is the top problem for builders going into 2016, with more than three-quarters of those polled by the National Association of Home Builders rating it as a significant problem.
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More than 2 million workers left the construction industry when jobs dried up during the housing bust, and only about half of them have returned. There are many reasons for the worker shortage, including fewer immigrant workers, lower pay relative to other industries, and a decline in young people entering the field.
Nearly 90 percent of builders surveyed by American General Contractors last year said that they had trouble filling some positions. The hardest to fill positions include carpenters (cited by 73 percent of builders), sheet metal installers (65 percent) and concrete workers (63 percent).
The National Association of Realtors said last fall that the builders’ failure to keep pace with demand “is contributing to persistent housing shortages and unhealthy price growth in many markets.”
Developers broke ground on 1.1 million homes last year, up more than 10 percent from 2014, according to the U.S. Department of Housing and Urban Development. During the peak of the housing bubble in 2006, the industry was erecting more than 2 million homes a year.
Other challenges cited by builders included the cost and availability of developed lots, federal environmental regulations and policies, and regulation of banking and financial institutions.
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