Construction of Smaller Single-Family Homes Has Yet to Rebound New Single-Family Homes Completed (Thousands)
Key Housing Market Indicators Point to Strengthening in 2015
Residential Construction (Thousands of units)
Total Starts 1,003 1,112 10.8
Single-Family 648 715 10.3
Multifamily 355 397 11.8
Total Completions 884 968 9.5
Single-Family 620 647 4.5
Multifamily 264 320 21.2
New (Thousands) 437 501 14.6
Existing (Millions) 4.9 5.3 6.3
Median Sales Price (Thousands of dollars)
New 283.1 296.4 4.7
Existing 208.5 222.4 6.6
Construction Spending (Billions of dollars)
Residential Fixed Investment 550.6 600.1 9.0
Homeowner Improvements 134.8 147.8 9.6
Notes: Components may not add to total due to rounding. Dollar values are adjusted for inflation by the CPI-U for All Items. Sources: US Census Bureau, New Residential Construction and New Residential Sales data; National Association of Realtors®, Existing Home Sales; Bureau of Economic Analysis, National Income and Product Accounts.
9JOINT CENTER FOR HOUSING STUDIES OF HARVARD UNIVERSITY
This contraction left the construction workforce significantly older. The share of trades workers age 55 and over rose from 10 percent in 2007 to 16 percent in 2013, while the share under the age of 35 fell from 43 percent to 35 percent. This pattern reflects not only the aging of workers that held onto their jobs through the recession, but also a falloff in hiring of younger workers. Indeed, only 13 percent of newly hired construction workers in 2013 were under age 25, down from 18 percent before 2006. Without younger workers to bolster the ranks as older workers move toward retirement, labor shortfalls may emerge. As it is, a 2015 National Association of Home Builders (NAHB) survey found that a majority of construction firms were already report- ing labor shortages in many trades.
To help rebuild its diminished workforce, the construction industry may have to reevaluate the composition of its labor pool. Given that more than a quarter of workers in the trades in 2013 were foreign-born, unpredictable changes in immigra- tion could have an outsized impact on the availability of skilled labor. At the same time, women make up less than 3 percent of trades workers and thus represent a largely untapped resource for the industry.
Meanwhile, development financing is recovering from a sharp drop-off during the recession. According to NAHB, residential construction loan volumes were up 4.5 percent in the fourth quarter of 2015, marking 11 consecutive quarters of increases. While growing nearly 19 percent for the year as a whole, the residential construction loan stock remained 70 percent below the 2008 peak. Other types of acquisition, development, and construction loans have recovered more fully and now stand 51
percent below peak. Credit may be tightening, however. NAHB financing surveys indicate that credit easing slowed at the end of 2015, while the Federal Reserve Board’s Senior Loan Officer Opinion Survey on Bank Lending Practices reported some tight- ening of lending criteria for construction and development loans in late 2015 and early 2016.
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