Great news for those in the building sector: Employment opportunities are on the rise. In June, the construction field expanded by 23,000 positions, with an additional 800 jobs introduced in the residential construction domain, as per the Friday announcement from the Labor Department. On average, construction employment has been rising by 15,000 positions monthly over the past year.
“Demand for construction is soaring,” said Richard Branch, the chief economist at Dodge Construction Network, during a discussion with Yahoo Finance. “This is further evidence that we’re moving beyond the low point and brighter days are approaching.”
This surge in hiring also reflects a revival in the new house market, where an increased level of optimism has encouraged builders to proceed with their projects. Additionally, it suggests a growing trend of homeowners preferring to enhance their existing homes instead of selling them.
June’s employment report indicates that residential building jobs have increased by 11% compared to the period before the pandemic, whereas positions in non-residential building have risen modestly, by 1.8%. Both sectors experienced monthly growth.
This aligns with previous reports which demonstrated an upward trend in single- and multi-family residential starts, permits in May, and unexpected growth in new home sales.
“Considering how much the construction sector relies on interest rates, many thought job growth would plummet,” shared Odeta Kushi, the deputy chief economist at First American, with Yahoo Finance. “However, the lack of existing homes on the market has bolstered new construction.”
In May, housing inventory was the lowest ever recorded for the month, the National Association of Realtors revealed, following a 2.7% drop in sales of previously owned homes, pointing towards the inventory problem.
Lawrence Yun, chief economist at NAR, wrote after the release of the jobs report, “Younger adults have found the pursuit of homeownership challenging. High mortgage rates and limited housing stock are the major obstacles.”
Homeowners, most of whom enjoy mortgage rates significantly lower than the prevailing market average of 6.81%, have been hesitant to sell and lose those favorable rates. Instead, many are choosing to modify their existing homes. This was validated by the jobs data, with the quickest monthly increase observed among residential trade contractors. This group includes workers skilled in areas like concrete pouring, site preparation, plumbing, painting, and electrical work, with an addition of 10,000 jobs.
Kushi further explained, “In light of the shortage of homes on the market and homeowners opting to stay with their current low mortgage rates, many consumers are deciding to refurbish their existing homes instead of purchasing new ones. Consequently, more construction workers are needed.”
However, hiring additional workers continues to be challenging. In May, there were 366,000 job openings in the construction field, according to JOLTS, which represents an increase of 19,000 from the previous month. Monthly hires escalated from 357,000 to 379,000, marking an addition of 22,000 new hires for the month. Concurrently, there was a slight increase in the ratio of construction hires to job openings, suggesting a slight ease in hiring.
Meanwhile, the number of construction workers quitting their jobs surged by 57,000 while layoffs decreased, indicating a “persistent tightness in the construction labor market as demand for new construction increases,” according to Kushi.
Branch highlighted, “The lack of labor, especially in the construction sector, is impeding small builders’ ability to recruit. The continual rise in construction material prices is also affecting the industry’s profit margins, making affordable single-family construction even more challenging.”