A chronic labor shortage in the housing industry is a problem that has been steadily gaining steam over the past few years, according to NAHB/Wells Fargo Housing Market Index. More than four out of five builders expect to face serious challenges regarding the cost and availability of labor in 2019, the recent monthly survey revealed.
The questions in the survey aimed at finding the problems faced by builders in 2018 and expect to face in 2019. Cost and availability of labor were among the top concerns among 82 percent of builders in 2018. This was followed by the price of building material. An identical 82 percent expect labor shortages will be their primary issue in 2019, while material prices fell to the second slot at 69 percent, the report stated.
Only 13 percent of builders cited labor issues as an important concern in 2011, with the rate steadily rising over the ensuing years and peaking at 82 percent in each of the past three years. Ashok Chaluvadi, in his blog entitled “Top Challenges for Builders: Materials in 2018, Labor in 2019” noted that In 2011, building material prices was reported as a significant problem by 33 percent of builders. This share increased to 46 percent in 2012 and went up to 77 percent in 2017 before reaching a peak at 87 percent the previous year.
“Compared to the supply-side problems of materials, labor and lots, problems attracting buyers were not as widespread last year, but builders expect many of them to become more of a problem in 2019. Negative media reports making buyers caution was a significant problem for 48 percent of builders in 2018, but 62 percent expect it to be a problem in 2019,” Chaluvadi said. He also noted that concern about employment/economic situation was a problem for only 28 percent of builders in 2018, but 46 percent expect it to be a problem this year.
According to data that looked into the share of single-family builders reporting problems attracting buyers revealed that 31 percent of buyers in 2019 expect prices or interest rates to decline if they wait compared to 23 percent in 2018. Twenty-four percent of buyers in 2019 are unable to sell existing homes.
Read the full report here.