While several headwinds facing the housing market are more cyclical in nature, the challenge related to the construction labor shortage is a constant. The strain of the labor shortage has been more subdued as home building volumes are lower, but the quality and quantity of skilled labor will remain a significant limiting factor for construction as activity scales back up.
The issue consistently ranks as a top concern for builders surveyed by the NAHB. Chief economist Rob Dietz says the labor shortage is a “critical issue” discussed in each market he visits across the country. The industry’s labor challenge is multifaceted; at the same time workers are aging out and retiring from the workforce, the industry is struggling to attract younger generations to careers in the trades. Recent estimates suggest that for every five people that retire, the industry is bringing in approximately two new workers.
According to estimates from the most recent Home Builders Institute (HBI) Construction Labor Market Report, the required amount of construction workers needed per year is 723,000. For the period between 2024 to 2026, this estimate represents the need for an additional 2.17 million adjusted net hires for the industry. Ed Brady, CEO of the HBI, has previously shared with Builder that there are no quick fixes to the labor shortage and the correction in the labor market is “going to happen over a generation.”
Recognizing the need for additional skilled labor, industry organizations, including the HBI, Building Talent Foundation (BTF), The Home Depot, and Lowe’s, are piloting efforts to encourage individuals to consider careers in the trades and support local organizations with skilled training focuses.
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