Labor shortages emerged as yet another mitigating factor: “Skilled labor shortages continues to hamper builders, making it difficult to build,” Kushi said. “In April, hires per job opening, a measure of how readily employers can turn openings into new employees, dipped to a series low. No hammers at work, no homes. Yet, it’s not from lack of trying. The annual growth in average hourly earnings of production and non-supervisory employees in construction picked up in May, increasing 6.3% year over year. The best way to attract and retain workers is to pay more.”
The National Association of Home Builders also reacted to the disappointing report. NAHB’s chairman, Jerry Konter, sees little change in the future as he predicted construction costs continuing their increase. Konter is a developer in Georgia who has met the challenges firsthand.
“Single-family home building is slowing as the impacts of higher interest rates reduce housing affordability,” Konter said in a prepared statement. “Moreover, construction costs continue to rise, with residential construction materials up 19% from a year ago. As the market weakens due to cyclical factors, the long-term housing deficit will persist and continue to frustrate prospective renters and home buyers.”
Robert Dietz, NAHB’s chief economist, sees further weakening ahead: “In further signs that the housing market is weakening, single-family permits are down 2.5% on a year-to-date basis and home builder confidence has declined for the last six months,” he said in a prepared statement. “Due to the acceleration in construction activity in recent quarters, housing completions are rising. Single-family completions were up 8.5% in May 2022 compared to May 2021 as inventories rise.”