THE NAHB RECENTLY CONDUCTED A NATIONWIDE survey of about 300 single-family builders to track changes in callback experience and builder perspectives on the construction labor market. We found that the nation's home builders were able to maintain high standards of quality control and customer service during the past year while producing a record number of single-family units. This performance reflected improvements in the availability of skilled labor and in steps taken by builders to reduce and deal with customer callbacks.

Construction Labor Market The unemployment rate in construction was pushed down to a record low in 2000 when both residential and nonresidential construction were surging, and labor shortages were at the top of the problem list for home builders. Housing production has continued to climb since then, but nonresidential construction went into free fall early in 2001 and now is running about 25 percent below the peak in 2000. This development loosened up the overall construction labor market to the benefit of home builders.

Home builders confirmed improved labor market conditions in a recent NAHB survey. Acute shortages of skilled labor were reported by only one-sixth of respondents, compared with 30 percent in 2000, and less than 10 percent of the builders reported acute shortages of specialty trade contractors.

In 2000, most builders were concerned about the quality of available labor, and more than four-fifths said it was a major concern. This year, 13 percent say quality is not a concern at all, and less than two-fifths say it's a major concern. A shift of quality labor from the nonresidential to the residential construction market helps account for these swings.

Customer Callbacks Our survey showed that the number of customer call-backs—and their severity—has been contained and that builder response time has been compressed despite record levels of housing production. As in recent years, some of the most common customer complaints related to paint, caulking, and wallboard. The median number of callbacks was two, the median cost of response was $200, and the median response time was four days—down from six days in 2000.

Quality Control Measures The improved availability of skilled labor has helped with quality control, and most builders have expanded their efforts to reduce customer callbacks. Three-fourths of builders in our survey simply cited better quality control. More specific responses included the following measures: walk-through before closing, thorough punch lists before closing, and striving for no defects. Small builders starting fewer than 25 units per year put a relatively high emphasis on hiring highly qualified subcontractors, while large companies starting more than 100 units per year put more emphasis on inspections, punch lists, and walk-throughs in the quality control process.

David F. Seiders
Chief Economist, NAHB Washington, D.C.