New home construction has not kept pace with the improving job market in recent years and is part of the reason that housing inventory is so scarce and home prices are growing so quickly, according to a report released today by the National Association of Realtors.
After over-building leading up to the housing bubble, developer laid off workers and scaled back construction by more than 75 percent. After the crash many of those workers migrated to other industries, making it harder for builders to quickly ramp up work. There are also fewer builders now than there were a decade ago, with many going bust in the bubble and others consolidating with competitors.
While home starts have come back since the recession, the new NAR report finds that in two-thirds of markets homebuilding activity has not kept pace with the number of newly employed workers. In particular, construction of single-family homes remains at less than half its prerecession levels.
Many of the markets with the largest disparity of jobs versus home construction were hit hardest by the housing crisis but have fully rebounded, including San Jose, San Francisco, San Diego and Miami. New York is also among the top cities where home building has not kept pace.
There are several reasons that new home construction has grown so slowly in recent years, including rising construction and labor costs and tight credit. Despite those headwinds, new home construction is expected to grow by more than 25 percent this year. By Beth Braverman