- The residential construction sector added 6,700 new jobs in February.
- Construction wages are 6% higher than the same time last year, marking the fastest growth in 40 years.
- Hiring and better pay could lead to more affordable housing amid a historic housing boom.
The homebuilding sector is hiring more workers and raising wages — and that could mean more affordable housing is on the way.
Overall, the construction industry added 60,000 jobs in February, and wages for non-supervisory positions saw the fastest growth rate in 40 years, according to the US Bureau of Labor Statistics. United.
“The average hourly wage in construction rose 6% year over year in February, the fastest pace since 1982,” Odeta Kushi, First American’s deputy chief economist, told Insider. “Attract and retain more builders and there will be more vanguards on new homes.”
The homebuilding industry in the United States has seen its fair share of setbacks in recent years. Between labor shortages and a lack of building materials, homebuilders simply can’t seem to catch a break, but job and wage growth in February gives cause for optimism. If wages continue to rise, they will likely attract more potential builders. As the industry grows, this could lead to an increase in residential construction which could result in more affordable housing.
“This increase is good news for an industry struggling with chronic labor shortages,” Kushi said. “We need to build more houses, and in a labor-intensive industry, you need more workers to build more houses.”
Higher wages could lead to an increase in housing construction
Housing affordability remains at historically low levels as the lack of homes available for sale has increased competition among buyers. The slowdown in construction is attributed to many factors, but primarily a labor shortage that has stalled construction projects across the country.
“The shortage of skilled labor in the construction industry is nothing new, it’s been a problem for over a decade now,” Kushi said. However, she noted that the February data is supportive as the residential construction rate is up 6.2% from pre-COVID levels.
According to an October survey by the National Association of Homebuilders, more than 55% of single-family home builders reported labor shortages in 16 home building trades, the largest being carpentry. The NAHB also notes that shortages of subcontractors are even more prevalent than “shortages of labor employed directly by general contractors.” According to them, at least 90% of single-family home builders report a shortage of subcontractors in each of the three categories of carpenters (related to trade and training) and 80% to 85% report a shortage of subcontractors in six other trades.
“Attracting a skilled workforce will remain a key objective for construction companies over the coming quarters and will become more challenging as the labor market strengthens and the unemployment rate declines,” the researchers wrote. NAHB.
If the residential construction sector welcomes more workers, it could relieve the housing market of affordability problems. Indeed, as more and more homes are introduced to the market, buyers will have to compete less for available inventory. As competition lessens, home prices should moderate and eventually fall.
“Higher construction costs due to labor shortages are one of the factors responsible for the recent rise in home prices,” said Robert Dietz, senior vice president and chief economist of the NAHB, at Builder Online, adding that “the future of homeownership hinges on the cost of new homes and improvements.” can only be achieved through industry-wide efforts to improve workforce prospects.”