WASHINGTON – March 27, 2015 – Homebuilding continues to lag behind pre-recession levels, even as the economy shows gains and buyer demand is high. Why are builders still so cautious?
A new survey by the National Association of Home Builders finds that two-thirds of builders said their greatest concern for 2015 is the availability of labor. Building material prices ranked closely behind as a top concern at about 67 percent, followed by 57 percent of builders who said lot availability.
In 2011, only 13 percent of homebuilders surveyed said labor availability was a concern, and only 21 percent worried about lot acquisition.
With labor concerns, most builders are most concerned about the availability of rough and finish carpenters, framers and masons. More than 60 percent of the homebuilders surveyed reported "some" or "serious" carpenter shortages.
"The uptick in overall employment has put additional pressure on finding qualified construction workers," writes David Crowe, NAHB's chief economist. "Scarcities and rising wages have been worse in the energy production regions of the country. … Wages will have to rise to bring more of the experienced workers back from where they went during the housing collapse."
Builders continue to grapple with lot shortages, which began surfacing as a problem in 2012. By mid-2014, about three in five builders reported "some" or "serious" lot shortages.
Builders' concerns have changed as the overall housing market has improved. For example, about 67 percent of builders were concerned about buyers qualifying for a mortgage in 2013, but that percentage fell to 45 percent in 2015. Also, builders are less concerned about the competition from distressed sales – 40 percent in 2013 said it was a big problem compared to 19 percent in 2015.
Source: "Supply-Oriented Concerns Top Builders' Lists in 2015," BUILDER (March 2015)
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