Labor Costs to Push Up Housing Prices:
Housing starts are up 24 percent from a year ago, but
residential construction employment is up only 3.1 percent, according to the
U.S. Commerce and Labor Departments.
During the slow down in new construction, wages were cut or laid off workers naturally sought out other jobs. Now that housing starts and housing demand have heated back up, the housing industry is struggling to get those workers back to fill demand. And in order to attract skilled workers back, builders are paying more.
Total employment in construction increased by 48,000 in February. Since September, construction employment has risen by 151,000. The biggest growth in February construction jobs came in residential specialty trade contractors, up 17,000. Those trades, such as plumbers, painters, and electricians, have been boosted not just by an increase in home construction but in home remodeling as well.
For example: in Las Vegas where Pardee Homes is building 150 percent more homes this year than they did last year, finding workers is increasingly difficult. "We lost quite a bit of labor to the oil fields and to places like Wyoming and North Dakota, where you would not expect it to go," noted Klif Andrews, Pardee's Las Vegas president.
During the slow down in new construction, wages were cut or laid off workers naturally sought out other jobs. Now that housing starts and housing demand have heated back up, the housing industry is struggling to get those workers back to fill demand. And in order to attract skilled workers back, builders are paying more.
Total employment in construction increased by 48,000 in February. Since September, construction employment has risen by 151,000. The biggest growth in February construction jobs came in residential specialty trade contractors, up 17,000. Those trades, such as plumbers, painters, and electricians, have been boosted not just by an increase in home construction but in home remodeling as well.
For example: in Las Vegas where Pardee Homes is building 150 percent more homes this year than they did last year, finding workers is increasingly difficult. "We lost quite a bit of labor to the oil fields and to places like Wyoming and North Dakota, where you would not expect it to go," noted Klif Andrews, Pardee's Las Vegas president.
Andrews said he is paying workers five to ten percent more now,
and that has pushed his home prices higher. "We've raised median home
prices up over 15 percent, so we've been able to stay a little bit ahead of it,
but cost increases, it's not just labor, it's also materials," he added.
Nationwide, the median
price for newly built homes rose 2 percent in January and new home prices now
far exceed the median price for existing homes.
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