Will New Construction Save the Housing Market? Not If There Aren’t Any Workers
By Dean Lassiter @ Real Estate Daily
April 24, 2018

We all know there is a shortage of houses, so why don’t builders just make a bunch of houses? The short answer – there aren’t enough workers. When the housing crisis began, builders were the first to lay off workers, and they were slow to start hiring again. At its peak, the construction industry had more than 5 million employees in 2006. Ten years later, there were only 3.8 million.

Adding to the shortage are the policies regarding the opioid epidemic and immigration which prevent even more potential workers from entering the labor pool. To improve this situation, builders and organizations have established vocational programs with local schools to train the younger generation in construction. It remains to be seen whether these programs will help the industry.

Key Takeaways

  • About 1.2 million new homes need to be constructed this year, but due to the lack of constructions workers only about 900,000 homes will be built.
  • The shortage of construction workers is due to the housing crisis that caused many builders to lay off workers immediately, and those workers had to find jobs in other industries to support themselves.
  • Due to policies regarding the opioid epidemic and immigration, some potential workers are kept from the labor pool.
  • Builders and organizations are setting up vocational programs to encourage younger generations to start a career in construction and hopefully offset the deficit of workers.


In this blazing-hot housing market of severe home shortages and rapidly rising prices, many buyers around the country have found themselves left shivering in the cold. But while builders would love to swoop in, construct a bunch of homes, and save the day (while making bucketloads of cash), they can’t. They simply don’t have the manpower.

Construction workers have become an increasingly rare and precious commodity in today’s housing market. The national labor shortage is dramatically slowing down builders—many of whom already have their hands full with remodeling homes for baby boomers planning to age in place, and rebuilding thousands of homes ravaged by last year’s hurricanes and wildfires. Combined with overall rising construction costs, it means an influx of new homes to ease the housing shortage and tame runaway prices isn’t coming anytime soon.

Skilled workers such as home framers, electricians, plumbers, masons, carpenters, and HVAC installers are especially in demand, builders say.

But builders are partly to blame for the crisis, which is helping to drive up home prices across the nation. They were some of the first to lay off workers during the financial crisis as development stalled, and many of those workers have since moved on. The crackdown on immigration and the opioid epidemic have siphoned off laborers. Meanwhile, many potential workers simply don’t want to toil outside in the heat and the cold when they could work in a climate-controlled office.

In other words, it’s a perfect storm for both builders and aspiring home buyers.

“We’ve got rising housing demand at the same time that the residential construction industry lacks workers,” says Robert Dietz, chief economist of the National Association of Home Builders. He predicts about 900,000 single-family houses will be built this year—whereas 1.2 million are needed to keep up with demand from those hoping to purchase a home of their own.

How bad is the labor shortage?

To put the problem into perspective, there were 250,000 unfilled construction jobs at the beginning of the year, according to an NAHB analysis. The unemployment rate for the industry, reflecting unfilled positions, was 7.4% in March, according to a government data analysis by the Associated General Contractors of America, a trade group for commercial builders. That’s significantly higher than the national unemployment rate of just 4.1%.

The dearth of construction workers is slowing down all stages of the business, says Jason Scott, owner of North Star Premier Custom Homes in Westlake, OH, and president of the local Home Builders Association.

View the original article at Realtor.com