A key trend in real estate markets nationwide has been a tight supply and current data point to a big year for construction, which should be music to the ears of real estate agents and brokers looking to build off momentum built in 2017.
According to a CNBC report, in December the construction industry added 30,000 jobs, according to the Bureau of Labor Statistics. During the year, construction added 210,000 jobs, a 35 percent increase over 2016.
Construction spending is also soaring, rising more than expected in November to a record $1.257 trillion, according to the Commerce Department. That was up 2.4 percent annually. Spending increased across all sectors of real estate, commercial and residential, with particular strength in private construction projects.
Construction firms are clearly looking to hire more workers. Three-quarters of them said they plan to increase payrolls in 2018, according to a new survey from the Associated General Contractors of America. According to the association’s CEO, Stephen Sandherr, industry optimism for all types of construction, measured by the ratio of those who expected the market to expand versus those who expected it to contract, hit a record high.
“This optimism is likely based on current economic conditions, an increasingly business-friendly regulatory environment and expectations the Trump administration will boost infrastructure investments.”
The biggest concern for the industry is the shortage of labor, which remains severe. This is putting the brakes what could be a far stronger recovery in the residential housing market, which desperately needs more homes. December’s employment report did signal the biggest monthly rise in residential construction jobs of 2017, but homebuilders are still looking for skilled labor. Housing starts are increasing slowly, but they are not even close to meeting the strong demand.
In 2017, a net 190,000 new workers entered the construction industry, far lower than the prior three-year average of 284,000 annual additions. The National Association of Realtors, which is essentially begging builders for more homes, points to this as a huge problem and is appealing to Congress for new policies to ease the worker shortage. NAR chief economist Lawrence Yun said there are options to boost employment.
“There needs to be serious consideration in allowing temporary work visas until American trade schools can adequately crank out much needed, domestic skilled construction workers.”