The Homebuilding Industry is Still Plagued by This

Fleming: “Finding ways to increase the productivity of construction workers is critically important to alleviating the labor-shortage challenge and the gap between household formation and homebuilding.”

SANTA ANA, CA—Despite the encouraging number of residential-construction jobs being added to the US market in December 2017, productivity needs to increase in order to meet inventory demand for housing, First American Financial Corp.’s chief economist Mark Fleming says. The firm reports that housing jobs increased by 8,200 to a level of 780,000 in December, a 1.1% increase over November and a 3.6% increase over a year ago.

Nevertheless, housing inventory is still well below demand. “As 2018 begins, one of the most important concerns for the housing market is the availability of inventory for sale,” said Fleming in a prepared statement. He noted in the firm’s estimation of potential home sales in December that homeownership demand will remain strong in 2018, particularly as more Millennials make the lifestyle decisions that drive the desire to be a homeowner, such as getting married and having children; yet, existing homeowners, the largest source of supply for the housing market, are increasingly unwilling to sell. “Whether unable to find something affordable to buy because of the shortage of inventory, or rising mortgage rates means that even borrowing the same amount of money costs more each month, the incentive to move for existing homeowners is declining.”