Confidence Dips as Builders Worry About Labor
Mixed economic indicators signal uncertainty in the home-building industry.
Single-family housing starts are rising, albeit slowly, and one forecaster sees the economy improving into 2017 (with some caveats). On the flip side, a survey of builder attitudes that’s been running for 30 years shows confidence dipping since the start of the new year, and worries about cost and availability of labor at the top of builders’ minds.
Positive Overall U.S. Economy For 1H 2017?
According to the recently updated Decision Analyst U.S. Economic Index, January 2017 saw a 7% boost over January 2016. And since the Index is a leading economic indicator looking at the overall U.S. economy, this looks like good news for the first half of the year, at least — if events in Washington cooperate. “The overall trend of the U.S. Economic Index over the past few months suggests that 2017 will likely get off to a positive start,” said Jerry W. Thomas, President/CEO of Decision Analyst. “However, the change of political power in Washington carries with it risks of economic distractions and economic turmoil.”
The Decision Analyst Economic Index is based on a monthly online survey of several thousand households balanced by gender, age, and geography. Read the full report here.
Builders Are Concerned … Mostly About Labor
The NAHB has been surveying builders for 30 years, asking about their confidence levels in general, and asking specific questions on topics of interest. The latest confidence report, released today, reveals that builder confidence has dipped downward for the second consecutive month. This may not be cause for alarm, considering that confidence is still higher than average over recent years. The NAHB press release spins the news as a return to normalcy; the headline is “Builder Confidence Continues to Settle Back to Sustainable Levels in February.”
But the trade group also polls builders on their biggest worries, and in the January 2017 report, the top concern among builders is still “Labor Cost/Availability.” In 2016, 78% of builders polled said that they had grappled with the problem, and 82% say that they expect to do so in 2017.
The NAHB post on the results says, “Topping the list of problems builders faced in 2016 and expect to face in 2017 is the Cost/Availability of Labor, a significant issue for 78% of builders in 2016 and one that has significantly grown in importance since 2011. That year, 13% of builders rated labor as a significant problem, followed by 30% in 2012, 53% in 2013, 61% in 2014 and 71% in 2015.”
And there is real data to back up those builder worries. Looking at the latest data from the Bureau of Labor Statistics, home builder and remodeler employment continues to grow quickly and hiring is increasing. Check out the NAHB’s take on the data here.