Despite the massive worker shortage plaguing construction, new figures from the Bureau of Labor Statistics show that homebuilders have slowed their hiring pace. The trend moves upward at a crawling pace.
In April, according to new numbers released this month, developers hired 4,400 specialty contractors nationwide, down 77% from the 19,000 contractors hired in March.
It’s a shift from earlier in the pandemic. While the residential construction sector saw significant job losses in March and April of last year as the economy shut down in response to burgeoning COVID-19 case counts, it quickly rebounded.
Between February 2020 and April 2021, the sector has added more than 46,000 jobs.
Economists claim the new slowdown relates to material prices. The shortages don’t end at the job site; slowdowns in log industry hiring continue since April 2020, marking three straight quarters of decline.
The situation “is creating a problem getting necessary building materials out of the factories and onto the job sites,” said Carl Reichardt, Jr., a managing director and home-building analyst at investment bank BTIG.
But it’s not just lumber; steel and appliances also hang in short demand. The price increase of a single piece of lumber may not seem like much, but homebuyers can expect to pay $35,000 higher than before due to the materials shortage.
Supply shortage bottlenecks cause the supply shortage. Companies already at capacity aren’t looking to increase their workforce.
Many buyers may reach a breaking point in time, especially if mortgage rates rebound, creating affordability issues.
As Mike Fratantoni, chief economist at the Mortgage Bankers Association said, “You may see some people throw in the towel and decide to wait until next year.”
Slows in construction hiring due to materials shortages and higher home prices spell out a recipe for economic difficulties for buyers. Some might give up and wait for market change before buying homes.