Residential construction has taken the lead in lifting our nation out of the economic downturn caused by COVID-19. Builder confidence is at an all-time high. Record-low interest rates have renewed buyer traffic. New-home sales are close to their highest level in 14 years—nearing an annual rate of 1 million in the latest report.
Housing is the bright spot in the economy, and NAHB members are poised for the quick rebound from the COVID-caused downturn.
Builder confidence for newly built single-family homes hit the highest reading in its 35-year history in the latest report, according to the NAHB/Wells Fargo Housing Market Index. The HMI’s component indices gauging current sales conditions, sales expectations for the next six months, and traffic of prospective buyers all rose to their highest-ever readings.
Many buyers are looking for newly constructed homes because of a shortage of existing homes on the market, and demand for new housing starts is expected to see additional gains, according to NAHB economists. The pandemic has caused a renewed sense of home as refuge, and a suburban shift away from high-density areas is keeping builders busy.
Our remodeler members are also optimistic. Many have been busy expanding or updating homes that have become our workplaces and schools amid quarantine orders.
After layoffs early on in the pandemic, construction hiring roared back in summer, with the rebound in construction job gains concentrated in the residential building sector, according to Bureau of Labor Statistics data. As the overall labor market continues to recover, residential construction can be a haven for displaced workers from other industries still struggling to recover.
Our educational arm, the Home Builders Institute, is helping to train the next generation of skilled workers to combat labor shortages in our industry, as well as transitioning military members to help fill those jobs. HBI also works to give justice-involved individuals a second chance and a meaningful career.
A strong, well-trained workforce is critical to the industry due to housing’s outsized role in the economy, and there are possibilities for significant job growth. Building 1,000 average single-family homes creates 2,900 full-time jobs and generates $111 million in taxes and fees for all levels of government to support police, firefighters, and schools. Similarly, building 1,000 average rental apartments generates 1,250 jobs and $56 million in taxes and revenue for local, state, and federal governments. After years of slow growth following the Great Recession, housing still has a way to go before production matches growing buyer demand.
Rising supply costs, particularly lumber, threaten the sector’s momentum. Many in the industry are worried about higher lumber prices that have added nearly $16,000 to the cost of a typical new single-family home since mid-April. More domestic lumber production or tariff relief is needed to avoid a slowdown in the market in the coming months.
While the industry faces the headwinds of higher construction costs, the overall outlook for the housing sector is positive. NAHB is pushing for government policies that enable its members to create jobs and lead the economy forward.
