Hiring in the construction industry isn’t slowing down.
Jobs in construction grew to 25,000, including 2,400 jobs added in residential construction in May, the Labor Department said on Friday. Over the past 12 months, construction has added an average of 17,000 jobs per month.
“While the housing industry, a very interest-rate sensitive sector, has been negatively impacted by the Federal Reserve’s monetary tightening, the construction labor market has not experienced a sharp decline,” Ksenia Potapov, economist at First American, wrote following the release.
“The continued strength is partially due to the years-long struggle that builders have had attracting and retaining skilled construction workers, making them less likely to part with skilled workers, even in a weaker housing market,” Potapov added.
The homebuilding rebound also reflects falling construction costs and increased demand from homebuyers who are contending with a major shortages in the resale market. That’s allowed developers to push ahead with previously approved projects — if they can find the talent.
“Residential contractors are benefitting from a severely undersupplied housing market and have seen growth in new home sales since September 2022,” Nick Grandy, construction senior analyst at RSM, wrote following Friday’s release.
For instance, new home sales jumped 4.1% to a seasonally adjusted rate of 683,000 units in April from the downwardly revised March rate of 656,000. That was 11.8% above the year-ago level and above economists’ expectations.
That’s led to a ramp-up in construction to meet this new demand.
A government report showed the pace of construction for single-family and multi-family units climbed 2.2% in April to a seasonally adjusted annualized of 1.401 million units. At the same time, building permits for single-home construction increased to a seasonally adjusted annual rate 855,000, up 3.1% from March’s revised rate of 829,000.
Still, the US is short of 1.7 million homes, according to data gathered by Chris Porter, chief demographer at John Burns Research and Consulting, while there’s a near-record number of homes under construction.
The need suggests that homebuilders will be keeping their attention on finishing off projects under construction rather than starting new ones, keeping single-family starts at bay and increasing demand for labor.
“There are still so many housing units under construction and we know you can’t automate away construction at this point so you will need more labor to complete those homes,” First American Deputy Chief Economist Odeta Kushi told Yahoo Finance in an interview.