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Labor Shortage in Homebuilding Could Dampen Recovery

""Fitch"":http://www.fitchratings.com/web/en/dynamic/fitch-home.jsp has added its voice to the chorus of those concerned about homebuilding industry's labor shortage and the effects it may have on new housing growth.


In a report released Monday, the ratings agency noted that while a deficit in workers may not lead to ""disastrous national numbers for housing,"" it--combined with a lack of available lots and overly tight mortgage qualification standards--may put a damper on the recovery.


""A portion of the construction trade is typically a skilled workforce, so replacing qualified workers who left during the downturn could be challenging. Some have retired, some have moved on to other higher-paying jobs and some have left the country,"" Fitch said, noting that labor shortages are prevalent in areas growing at a much faster pace than the national average, including metros in Arizona, Florida, Nevada, and California.

Continuing in that vein, Fitch said the degree of the national labor shortage will largely depend on the pace of the recovery. If the pace is moderate in 2013 and 2014 (as is expected), the crisis will only affect those faster-growing markets. If, however, the recovery is more ""V-shaped,"" labor shortages may lost longer as the addition of new skilled workers remains a challenge.

Fitch also noted that the current shortage of workers is leading to higher wages, inflating already high building costs. However, incremental increases in home prices over the next few several years should help to offset those costs.