Labor shortage weakening housing supply, affordability

A new report from the Home Builders Institute says 2.2 million new hires are needed over the next three years to meet residential construction needs. Photo: iStock.com/halbergman

A new report from the Home Builders Institute (HBI) shows that a lack of skilled construction labor is a key limiting factor for improving housing inventory and affordability.

The report also details that about 740,000 new workers per year for the next three years will be needed to keep up with demand.

“The construction industry needs more than 61,000 new hires every month if we are to keep up with both industry growth and the loss of workers, either through retirement or simply leaving the sector for good,” says Ed Brady, HBI president and CEO. “From 2022 through 2024, this total represents a need for an additional 2.2 million new hires for construction. That’s a staggering number.”

The estimated current need for additional workers, detailed in HBI’s Fall 2021 Construction Labor Market Report, is based on a National Association of Home Builders analysis of Bureau of Labor Statistics data. The estimate is determined by approximating the required net growth in employment due to construction expansion, plus the workers required to replace individuals who leave the sector permanently.

Additionally, the report shows home sales outpacing home construction, resulting in a growing backlog and supply chain bottlenecks. More than 12 million new households have been formed since the beginning of 2012, while roughly 10 million new homes for ownership and rent were built during the same period.

“The U.S. is experiencing a historically low supply of homes for sale, especially at the lower price points that newly formed households tend to need,” Brady says. “For residential construction to expand and housing affordability to increase, more skilled building trade workers must be recruited and trained for the homebuilding sector.”

Additional details

The report also outlines that the number of open construction jobs currently averages between 300,000 and 400,000 a month. Construction employment currently totals 7.42 million, with residential construction representing 3.1 million of that. The median age of construction workers is 41, with the share of construction workers aged 25 to 54 decreasing from 72.2 percent in 2015 to 69 percent in 2019.

“The construction worker shortage has reached a crisis level,” Brady says. “The situation will become more challenging in the coming year when other industries rebound and offer competitive wages and benefits.”

Brady says steps need to be taken to increase the number of skilled construction workers in the U.S., including changing the perception of careers in construction, increasing worker pay and attracting more women, minorities and low-income youth and adults.

“We need to build the next generation of skilled tradespeople in construction,” Brady says. “One of the most important tasks as an industry is to work with parents, educators and students, as early as middle school years, to demonstrate that young people can have the promise of great jobs and careers in the trades.”