Don’t Like New-Home Prices? Blame the Labor Shortage

by Kathy Hereford, August 9, 2019

Trade wars have boosted the price of raw materials, but NAHB says builders are also strapped for laborers: 50% say framing crews, for example, are hard to find.

CHICAGO – A shortage of subcontractors continues to exert upward pressure on new-home prices, according to the latest reading from the National Association of Home Builders (NAHB) and Wells Fargo Housing Market Index. The index asked builders about the specific shortages they’re facing among 15 different occupations. Subcontractors account for three-fourths of construction costs in a typical new home, and framing crews, carpenters and bricklayers are among the worst shortages.

The last year’s labor shortage has forced builders to pay higher wages to attract subcontractors and made it more difficult to complete projects on time. Three out of four builders surveyed (75%) say the shortages also translated into higher home prices.

“The impact of the labor shortage on home prices is particularly significant, as this is one of the factors contributing to the ongoing and serious problem of housing affordability,” the NAHB notes on its blog, Eye on Housing.

Labor shortages cited by builders

  • Framing crews: 83% (49% “some shortage,” 34% “serious shortage”)
  • Carpenters-rough: 82% (54% “some shortage,” 28% “serious shortage”)
  • Carpenters-finished: 78% (51% “some shortage,” 27% “serious shortage”)
  • Bricklayers/masons: 71% (5% “some shortage,” 26% “serious shortage”)
  • Concrete workers: 70% (47% “some shortage,” 23% “serious shortage”)
  • Plumbers: 67% (49% “some shortage,” 18% “serious shortage”)
  • Drywall installation workers: 66% (48% “some shortage,” 18% “serious shortage”)
  • HVAC workers: 64% (52% “some shortage,” 12% “serious shortage”)
  • Electricians: 62% (47% “some shortage,” 15% “serious shortage”)
  • Roofers: 61% (47% “some shortage,” 14% “serious shortage”)
  • Painters: 61% (47% “some shortage,” 14% “serious shortage”)
  • Flooring installers: 58% (47% “some shortage,” 11% “serious shortage”)
  • Landscaping workers: 58% (42% “some shortage,” 16% “serious shortage”)
  • Excavators: 57% (44% “some shortage,” 13% “serious shortage”)
  • Weatherization workers: 53% (46% “some shortage,” 7% “serious shortage”)
  • Building maintenance manager: 47% (36% “some shortage,” 11% “serious shortage”)

Source: “Labor Shortages Still Hurting Affordability,” National Association of Home Builders’ Eye on Housing blog (Aug. 5, 2019)

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