Construction jobs remain below pre-recession levels — and the employment gap is dragging down housing starts, according to a new study from the National Association of Realtors.

A decade after the economic recovery began, construction jobs remain below pre-recession levels — and the employment gap is dragging down housing starts, according to a new study from the National Association of Realtors.

The real estate trade organization isn’t expecting housing starts to catch up with demand over the next decade, according to the report. Based on recent trends, NAR projects that housing starts will increase from 1.36 million in 2018 to 1 million in 2028.

“In 2019, this means an increase of only 56,000 housing starts, and in 2020, an increase of 57,000 housing starts,” the report reads. “This is still below the shortage of about 600,000 units based on household formation and for replacement for obsolete/demolished housing.”

As of March 2019, only 2.9 million people were employed in residential building and specialty trades, compared to 3.45 million during the housing market boom.

NAR Chief Economist Lawrence Yun told Inman that housing starts and construction jobs are inextricably tied together.

“The number of construction workers is still below their peak levels and that is not surprising given that housing starts are below the historical average,” Yun said.

The number of construction jobs is rising, but the construction industry is having a difficult time filling those jobs, even as the average wage for construction workers hovers above wages for workers in manufacturing, transportation and warehousing, education and health, retail trade, hospitality and private industries in general.

The demand for workers is there but people are not coming into the industry,” Yun said. “One reason could be with the unemployment rate so low, people want to have what they perceive to be less laborious task of an indoor office job than an outdoor construction job.”

In the future, as demand continues to outweigh supply, the industry will need to use automation and more prefab and modular homes to meet the need for housing, Yun said. In other words, homes that are shipped to job sites and assembled, “almost like Lego blocks.”

But until that time comes, the industry will still depends on construction workers, Yun said. He believes there’s a chance that market forces will signal to young people looking to make money in the short term that construction is a good way to save up for investments such as college.

Another thing holding back housing starts is the general state of the construction industry, Yun said. In the past, small builders have been responsible for more housing starts overall, but post-recession it’s been mostly the large building companies that have carried that load.

One reason for that, Yun believes, is that construction loan underwriting has become stricter, giving the large builders with immense capital and backing from Wall Street an advantage.

Email Patrick Kearns

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