Home builders spent years waiting for the U.S. jobless rate to fall so that more people would buy houses. Now that employment is up, they’re struggling to meet demand as a scarcity of construction workers worsens.
Meritage Homes Corp. plunged last week after lowering its earnings forecast, citing rising labor costs and a shortage of workers to finish houses. Shea Homes, Hovnanian Enterprises Inc., Beazer Homes USA Inc. and William Lyon Homes have pointed to a paucity of tradesmen for a slowdown in completions in some markets.
“The lack of labor is a national problem for all the builders,” said Jay McCanless, a homebuilding analyst with Sterne Agee CRT in Nashville, Tennessee. “The thing we’re seeing and we’re hearing in the field is there’s just not enough qualified people at all.”
The labor shortage, which began in isolated pockets soon after new-home sales hit bottom four years ago, is deepening as buyers sign contracts at a pace not seen since before the housing crash. Many of the carpenters, electricians and roofers who lost jobs during the collapse haven’t come back because they found other work, aged out of the industry or, in the case of some immigrants, left the country.
Industry Jobs
There are about 1 million fewer residential-construction jobs than at the 2006 peak, according to an analysis of Labor Department data by the National Association of Home Builders. Since the bottom in January 2011, the industry added 469,400 employees through last month. The unemployment rate for the construction sector was 6.1 percent in August, down from 17 percent five years earlier.
“We could be growing faster if the labor shortage issue wasn’t present,” said Robert Dietz, an economist with the builders association.
U.S. new homes sold at an annual pace of 507,000 in July, up 26 percent from a year earlier, the Commerce Department reported Aug. 25. That’s still 31 percent below the average since 1995. The government is expected to report Thursday that housing starts, including apartments, fell 3.8 percent last month from July, according to the median of 78 estimates compiled by Bloomberg.
Jeff McQueen, president of the Active Lifestyle Communities division of Walnut, California-based Shea Homes, said the shortage is so severe in Arizona that the company is telling customers now signing contracts that their home may not be completed for a year. It normally takes five or six months.
“We’re not confident we can start because we don’t have the labor to start them,” McQueen said. “The industry needs more laborers. We can’t just keep stealing from each other and ratcheting up costs. The labor pool is not deep enough to deliver what we need.”