America Needs More Homes, So Why Are Builders Cutting Back?

The U.S. is short nearly 4 million homes, according to an analysis published in May 2021 by the Federal Home Loan Mortgage Corporation, commonly known as Freddie Mac. New construction was paused during the first couple of months of the COVID-19 pandemic when large parts of the American economy shut down.

The number of employed residential construction workers has increased and surpassed pre-pandemic levels but remains below its peak before the 2008 housing crisis. The Home Builders Institute also points to a lack of skilled workers—hundreds of thousands more workers are needed to keep up with demand. So why aren't they pushing through? Keep reading to know more.

Construction of new homes has slowed

Low mortgage rates during the coronavirus pandemic sparked a sharp increase in home prices, which by March 2022 had risen 20.6% from the year before.

Construction in late 2020 helped lead the recovery of an economy battered by the pandemic, but the number of homes built lagged behind sales—a situation worsened by supply-chain delays.

Home construction employment plateaued after rebounding from the 2020 low

The number of job openings in the construction industry plummeted in June 2022. There were 71,000 fewer openings compared to the month before, according to the Bureau of Labor Statistics’ monthly Job Opening and Labor Turnover Survey.

Construction job openings shrink

Construction workers are also quitting their jobs faster than being laid off or let go—a trend that has existed for sixteen consecutive months. Overall on a year-over-year basis, the construction industry still added 311,000 jobs, a 4.2% increase.

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