IRVINE, CA—The expansion of construction jobs is clearly an indication of expansion in the housing stock—the more starts, the more jobs, First American Financial Corp.'s chief economist Mark Fleming tells GlobeSt.com. In commenting on a recent jobs report, Fleming said, “Today's jobs report for February is very good news for the economy. The increase of 235,000 non-farm payroll jobs soundly beat the already high expectation of 195,000 jobs.”

Fleming also said the ISM manufacturing and non-manufacturing employment indices For February already indicated a 215,000 non-farm payroll jobs increase. “This, combined with drop in the unemployment rate to 4.7% and 2.8% year-over-year growth in wages are all signs of a strong labor market.”

For the housing market, construction employment has continued to add jobs—177,000 over the last six months. “It's interesting that specialty trade contractors, and heavy and civil engineering job categories were highlighted—a sign of growing demand for home improvement and infrastructure development, perhaps,” said Fleming.

We spoke with Fleming about how adding construction jobs affects the low housing stock and what he anticipates in this area of the housing market for the foreseeable future.

GlobeSt.com: How much will the addition of construction jobs affect the housing stock?

Fleming: Based on the data, there is a clear relationship between construction-job growth and housing starts—the more starts, the more jobs, so expansion of construction jobs is clearly an indication of expansion in the housing stock. A simple analysis of the relationship reveals that the 177,000 increase in construction jobs is likely associated with an increase of about 39,000 additional housing starts.

GlobeSt.com: What role do construction jobs play in the many factors developers need in order to build at a good pace?

Fleming: Usually, the jobs come later in the process. Land acquisition and development, as well as the permitting and approval processes, all tend to precede actual construction. All are important. Even if you get through the first two, you have to find the construction workers to build the homes.

GlobeSt.com: What do you anticipate to happen over the next year or so with construction jobs?

Fleming: I expect further expansion since housing starts, while increasing, are still below the late 1990s and early 2000s levels. Furthermore, as Millennial homeownership demand increases, the pace of construction will have to keep up.

GlobeSt.com: What else should our readers take away from this jobs report?

Fleming: This report solidified the Fed's decision to increase interest rates since it shows continued, and growing, labor-market strength.

We spoke with Fleming about how adding construction jobs affects the low housing stock and what he anticipates in this area of the housing market for the foreseeable future.

GlobeSt.com: How much will the addition of construction jobs affect the housing stock?

GlobeSt.com: What role do construction jobs play in the many factors developers need in order to build at a good pace?

GlobeSt.com: What do you anticipate to happen over the next year or so with construction jobs?

GlobeSt.com: What else should our readers take away from this jobs report?

Fleming: This report solidified the Fed's decision to increase interest rates since it shows continued, and growing, labor-market strength.

Instant Insights /

The Correlation Between Construction Jobs and Housing Supply

Related Stories

Recommended For You