Thursday, May 16, 2013

Skilled Trades Shortage Stymies Housing Recovery

Now that new homes are beginning to sell again, recovery in the housing market has met a new foe - shortages of skilled construction tradespeople willing to give up the alternative jobs they struggled to find during the hard times of double digit unemployment in our industry, and return to construction work. Some trade contractors report they are only able to fill 75% to 80% of the journeyman trade jobs needed to take on all the work offered to them.

The National Association of Home Builders reports that the five states experiencing the strongest recovery in housing starts are also finding severe shortages of framers, roofers, carpenters, and plumbers, a labor market problem which curtails even faster growth in new housing construction. Though construction industry unemployment still far exceeds the national overall unemployment rate of 7.5%, and employment in home building has increased only 5% from its 2011 all time low of 2 million workers, tradespeople who found other work during the five year industry slump are understandably reluctant to come back to the seasonal and cyclical construction workforce. Housing starts increased 47% in the last 12 months, but construction employment over the same year long period rose only 3.7%.

Half of the NAHB members surveyed report they have had projects delayed because of shortages of journeyman tradespeople, and 15% say they have refused to bid on some projects offered to them because they could not staff the jobs. Furthermore, new home price increases increased 12% from a year earlier, to an average of $247,000.00 driven by higher wages needed to attract skilled trades people back into the construction job market. NAHB estimates there are as many as 116,000 unfilled skilled construction jobs, and also that 22% of the home construction workforce is made up of foreign born workers.

NAHB chief Economist David Crowe predicts that increasing prices for construction materials, along with the skilled labor shortage, will prevent a return to the peak home construction rates of 2002-2006 until at least 2016. "We need to rebuild the infrastructure of the industry," Crowe concludes.
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