Labor shortage remains pricey
According to the National Association of Home Builders, shortages of labor and subcontractors continue to make a sizable impact on the industry including housing affordability.
A special set of questions in the July NAHB/Wells Fargo Housing Market Index survey asked builders specifically about shortages in 15 different occupations. Shortages of labor directly employed by builders remained at least fairly widespread for each of the 15, ranging from a low of 47% for building maintenance managers to a high of 83% for framing crews, the NAHB said.
The end result is additional pressure on new home prices.
The share of builders reporting a shortage of rough carpenters fell one point from 83% in 2018 to 82% this year. Labor shortages in the other 14 occupations were either unchanged or even more widespread than they were in 2018. Averaged across the 9 occupations NAHB has been covering in a consistent way since the 1990s, the association said the incidence of shortages reached 69% in 2019—the highest number on record.
This shortage seems especially severe relative to housing starts, which still have not fully recovered from their historically low 2009-2011 trough.
The NAHB also said that recent shortages of subcontractors have been more severe than shortages of labor builders directly employ. A possible reason is workers who were laid off and started their own trade contracting businesses during the housing downturn returning to work for larger companies.
This would improve the availability of workers directly employed by builders while reducing the availability of subcontractors, who account for about 75% of the construction cost in a new home, according to the NAHB.
A special set of questions in the July NAHB/Wells Fargo Housing Market Index survey asked builders specifically about shortages in 15 different occupations. Shortages of labor directly employed by builders remained at least fairly widespread for each of the 15, ranging from a low of 47% for building maintenance managers to a high of 83% for framing crews, the NAHB said.
The end result is additional pressure on new home prices.
The share of builders reporting a shortage of rough carpenters fell one point from 83% in 2018 to 82% this year. Labor shortages in the other 14 occupations were either unchanged or even more widespread than they were in 2018. Averaged across the 9 occupations NAHB has been covering in a consistent way since the 1990s, the association said the incidence of shortages reached 69% in 2019—the highest number on record.
This shortage seems especially severe relative to housing starts, which still have not fully recovered from their historically low 2009-2011 trough.
The NAHB also said that recent shortages of subcontractors have been more severe than shortages of labor builders directly employ. A possible reason is workers who were laid off and started their own trade contracting businesses during the housing downturn returning to work for larger companies.
This would improve the availability of workers directly employed by builders while reducing the availability of subcontractors, who account for about 75% of the construction cost in a new home, according to the NAHB.