- There's a boom in home sales, but historic shortages in labor and the supply of available homes.
- One industry group predicts the country needs 2.2 million more construction workers in the next three years.
- The group said labor shortages in the construction industry limit the supply of affordable or starter homes.
The construction industry needs over 2 million more workers over the next three years to keep up with booming demand for new houses amid the labor shortage, according to the Home Builder Institute.
HBI said in a labor-market report Thursday that a lack of skilled construction labor was a crucial limiting factor for expanding home construction and improving housing inventory and affordability. HBI is the National Association of Home Builders' nonprofit partner that provides training for the building industry.
The industry needs 61,000 new workers per month over the next three years to keep up with demand, totalling 2.2 million new hires, the report said. The institute based the figure on the average annual number of occupational openings in construction, which NAHB calculated by analyzing Bureau of Labor Statistics data.
"That's a staggering number," HBI president and CEO Ed Brady said in a press release accompanying the report.
Demand for construction boomed during the pandemic thanks to a wave of home improvements, but the industry's workforce shrank, plummeting from 7.65 million workers in February, 2020, to 6.53 million just two months later, BLS data shows. On top of construction workers, the BLS figures for the industry include other professions like carpenters and electricians.
"Hiring has been a challenge for a decade but the pandemic exacerbated it to the extreme," Matthew Messer, the owner of New York Solar Maintenance, told Insider in July. "We're all competing for an already small labor pool."
More workers are returning to the industry as construction companies offer higher wages and sign-on bonuses to attract more staff. Around 7.45 million Americans worked in the industry in September per preliminary BLS data, up from 7.26 million in September of last year.
But finding skilled labor is still a problem. The owner of an understaffed construction company in Arkansas said that he was so desperate for employees that he had to hire workers with zero experience in the industry.
The US is suffering from a labor shortage as record numbers of Americans quit their jobs in search of better wages, benefits, and working conditions. In 2020, construction laborers earned an average hourly wage of $20.92 and an average annual wage of $43,520, according to the BLS.
The labor shortage is wreaking havoc in the housing market, which was already tight because of a lack of starter homes. As baby boomers retire and are move into smaller homes, the US supply of starter homes is at its lowest point in 50 years.
In the meantime, 1.7 million people retiring ahead of schedule during the pandemic and millenials reaching peak years of household formation are fueling surging prices and demand for affordable homes.
"The US is experiencing a historically low supply of homes for sale, especially at the lower price points that newly formed households tend to need," Brady said in the HBI press release. "For residential construction to expand and housing affordability to increase, more skilled building trade workers must be recruited and trained for the home building sector," he added.