Construction industry would need 650,000 additional hires to meet demand

The number of homes available for sale in the U.S. is expected to remain at historically low levels in 2022, as the construction industry is severely hampered by material and labor shortages and struggles to keep up with demand.

According to a new report from theAssociated Builders and Contractors (ABC), the construction industry would need 650,000 more workers than its current level to meet demand in 2022.

Developers are also struggling to obtain basic materials such as lumber, slowing construction of an estimated 5.3 million homes that would meet demand. According to the National Association of Home Builders, 90% of developers reported delays caused by the materials shortage in 2021.

ABC estimates that the hiring of 1.3 million workers will barely cover the estimated 1.2 million workers who will leave for other industries by 2022. The labor shortage is further exacerbated by demographic trends that show youth hiring declining while retirements increase.

According to Redfin, 2022 started with the lowest number of homes sold on record, with active listings down 29% nationwide at the end of January compared to the same time last year. In early 2022, active listings fell below 500,000 nationwide for the first time ever.

The scarcity of basic building materials has caused the price of lumber to nearly double from $600 in April 2020 to more than $1,000 by the end of 2021. According to the Bureau of Labor Statistics' Producer Price Index, the average price of goods used in residential construction rose three times faster than the rate of inflation in 2021.

Unfortunately, the Biden administration has greatly exacerbated this phenomenon by implementing "anti-dumping" legislation that directly affects lumber imports from Canada and impacts homes as home prices continue to rise.

Wages in the US are rising at a rapid pace, allowing the population to hold up, for the time being, to these fluctuations, which should begin to slowly stabilize as the Omicron wave ends.

Source: Associated Builders and Contractors, National Association of Home Builders, Redfin, GlobeSt