While the harsh winter weather has made it tough for contractors to complete construction jobs on time, it has also made life difficult for home builders. The recently released National Association of Home Builders/Wells Fargo Housing Market Index showed sales expectations for newly-built, single-family homes has dramatically decreased throughout the country. The research showed builder perceptions have fallen to a reading of 46, which means more leaders in the industry would say that the current marketplace is "poor."
"Significant weather conditions across most of the country led to a decline in buyer traffic last month," said Kevin Kelly, chairman of the NAHB. "Builders also have additional concerns about meeting ongoing and future demand due to a shortage of lots and labor."
The lack of skilled workers in the industry has been a problem for more than decade, which means it may be time for construction companies to get serious about recruiting younger workers back to their firms. The Great Recession caused many millennials and recent graduates to look for work in new fields, which was the reason for a rise in the average age of contractors and laborers, according to The Dallas Morning News.
Construction Firms Need More Manpower
While the weather conditions have caused home builders to pump the brakes on their sales forecasts in recent weeks, they still must have skilled workers to help them complete the projects on the horizon. Even though builder confidence is down, demand for new homes is still strong. The falling sales number is a cause for concern; failing to have a talented workforce can be even more damaging in the long run.
"Clearly, constraints on the supply chain for building materials, developed lots and skilled workers are making builders worry," said David Crowe, chief economist of the NAHB. "The weather also hurt retail and auto sales and this had a contributing effect on demand for new homes."
When the demand for new homes returns back to steady levels, Crowe predicts that home builders won't be able grow their workforce right away. He told The Dallas Morning News that it will take time, and some businesses should expect for it to be a struggle. Nonetheless, he is confident that workers will return the industry if they need work.
Home Builders are Anticipating Tight Budgets
With the outlook for new construction is not looking favorable at the moment, many home builders will have to take a tepid approach to accepting projects into the upcoming year. Ted Wilson, a principal with Dallas-based housing analyst Residential Strategies, told the newspaper since current demand is low, it will be difficult for companies to raises the price for homes, even when equipment and labor costs are expected to grow.
"In addition to higher labor and materials prices, the next generation of lot prices will be somewhat higher in 2014, so builders are anticipating a tighter profit margin environment this year," Wilson said.