Also at the NAHB Design and Construction Week, was a lot of conversation about a looming and serious shortage in skilled construction labour.
During a three-hour seminar Wednesday morning, builders shared tips for finding and training newcomers and maintaining ties with their trades when labour is hard to find.
US Home Builders and Skilled-Labor Shortage: 2017
The skilled-labour shortage persists in the construction industry, pushing wages up, extending project timelines and putting pressure on builder–trade relations. That’s made the topic consistent fodder for discussion throughout this year’s Design and Construction Week, currently underway in Orlando, FL, said Construction Dive magazine Thursday.
LABOUR SHORTAGE LOOMING
Labour was joined by lots and lending as the three factors cited by National Association of Home Builders Chief Economist Robert Dietz during a press conference as essential to the residential construction industry’s health. And they all seem to be in a holding pattern — labour, in particular.
Construction’s job openings rate was 2.7 per cent in November, according to preliminary figures from the Bureau of Labor Statistics released this week, compared to 1.5 per cent in November 2015 and 3.3 per cent this past July.
Economists had predicted that the labor shortage would plateau in 2016, as a slump in the energy markets was expected to route more workers into the construction industry. That didn’t happen at the level anticipated, Dietz said. Instead, the situation persists as housing demand levels continue to rise.
SURVEY OF CONTRACTORS
A survey this summer of nearly 1,500 contractors across the US by the Associated General Contractors of America found that nearly seven in 10 respondents are having trouble finding hourly skilled workers. While that figured is a 10-percentage-point drop from a year earlier, three-quarters of those surveyed in 2016 expect to face similar challenges in the coming year. Nearly half of respondents said they’re either raising wages, adding over- time, or both, to keep up.
Jody Kahn, a senior vice president at John Burns Real Estate Consulting told Construction Dive earlier this month that the tight labor market is making it harder to guarantee project delivery schedules, causing builders to be more cautious about the work they take on and when they put homes up for sale.
SKILLED LABOR FUND
The Skilled Labor Fund announced its formation at a press conference held this week at Design and Construction Week, along with a request for funds to support its goal. The fund operating committee made an official fundraising ask at the show. Its goal is to raise US$5 million within the first year. Funding is being sought from any company affected by the lack of skilled labor and anyone affiliated with the industry.
The fund was created to address the increasing lack of high-quality, skilled labour entering the residential construction employment pool. With as many as 200,000 unfilled construction jobs in the US, an increase of 81 per cent in the last two years, the problem is confronting stakeholders across the industry and across the country. The fund seeks to raise funds through industry partners, including builders and remodelers, dealers and associations, market-affiliated companies, select government agencies, and building product manufacturers.
BUILDERS AS TRADE PARTNERS
While sourcing labor is a major challenge, retaining workers today is also difficult. Tim O’Brien, president of Tim O’Brien Homes in Milwaukee and Madison, WI, said his company established trade councils — or regular meetings led by the company’s trade partners — to help his team understand how they can best serve their trades. “I learn so much from these guys about what it takes to do the job right the first time,” he said.
Other tactics include helping grow partner businesses, getting involved with local schools and technical colleges to help train the next generation of construction labor, and improving schedule accuracy and job preparedness among the team.
HOME AFFORDABILITY AND DEMOGRAPHICS
CoreLogic Chief Economist Frank Nothaft also expects mortgage rates to rise and home prices to moderate in the coming year, said an NAHB summary of the conference.
He added that home purchase originations should rise 5.7 per cent in 2017, and that the credit risk for home loans is substantially lower than 10-15 years ago.
The biggest housing issue in 2017 will be affordability, according to Nothaft.
On the flip side, demographics will be very positive for housing and home sales going forward. “As millennials age from 25-to-30, that is a big potential base to expand the home buyer market,” said Nothaft.
HOUSING SUPPLY AND DEMAND
David Berson, chief economist for Nationwide Mutual Insurance, also expects mortgage rates to rise in the coming year, but he said this should not have a negative impact on housing demand.
He noted that most metro areas across the nation are relatively healthy, marked by solid job growth, mortgage delinquencies down near normal levels and house price gains that are strong, but not excessive.
A major concern going into 2017, he said, is that demand will exceed supply, which will put upward pressure on home prices.