Labor shortage leads to builders raising prices
Last week the National Association Home Builders (NAHB) reported that builders were experiencing a shortage of skilled labor, particularly rough carpenters, finish carpenters, and framing crews.
The report was derived from NAHB/Wells Fargo Housing Market Index survey for July. That same survey has now turned up insight into rising labor costs, translating into higher rising home prices.
About 84% of builders responding to the survey said the labor shortage is causing them to pay higher wages/subcontractor bids. And 83% of survey participants said the result is raising home prices with 73% saying it’s now difficult to complete projects on time.
Between 2015 and 2018, the number of builders saying the labor and subcontractor shortage is causing higher home prices increased by 22 percentage points, the NAHB said.
Labor costs are also outpacing overall inflation. While inflation has risen about 2.9% in 2018, labor costs have grown 5.2% as subcontractor costs have risen 7.2%. The NAHB notes that this of significance since about 75% of construction cost represents work performed by subcontractors.
Builders reporting that they have slowed down their intake of orders – as a result of the labor shortage – has doubled from 16% to 32% between 2015 and 2018.
In last week’s report, 90% of single-family builders reported a shortage of subcontractors able to handle rough carpentry work.
The report was derived from NAHB/Wells Fargo Housing Market Index survey for July. That same survey has now turned up insight into rising labor costs, translating into higher rising home prices.
About 84% of builders responding to the survey said the labor shortage is causing them to pay higher wages/subcontractor bids. And 83% of survey participants said the result is raising home prices with 73% saying it’s now difficult to complete projects on time.
Between 2015 and 2018, the number of builders saying the labor and subcontractor shortage is causing higher home prices increased by 22 percentage points, the NAHB said.
Labor costs are also outpacing overall inflation. While inflation has risen about 2.9% in 2018, labor costs have grown 5.2% as subcontractor costs have risen 7.2%. The NAHB notes that this of significance since about 75% of construction cost represents work performed by subcontractors.
Builders reporting that they have slowed down their intake of orders – as a result of the labor shortage – has doubled from 16% to 32% between 2015 and 2018.
In last week’s report, 90% of single-family builders reported a shortage of subcontractors able to handle rough carpentry work.