Residential Construction Jobs Rose in March Compared to Year Ago

Residential construction jobs rose 2.2% in March from a year earlier, according to government data, another indicator of small gains in the US housing market as the spring home-buying season approaches.

Data released by the US Bureau of Labor Statistics shows that since the beginning of the year, the market showed a modest 0.2% increase in seasonally adjusted residential construction jobs, as new housing starts in the early months of 2023.

At the same time, according to the data, there has been an increase of 1.1 percent in residential skilled trade jobs since March 2022.

Key TakeAways

• Residential construction jobs are up 2.2% from a year ago, a small indicator of a springtime recovery in the US housing market.
• Jobs have increased slightly since the beginning of the year, with a 0.2% increase.
• Residential skilled trade jobs grew 1.1% year-over-year. {alertSuccess}

The news comes with reports of a significant uptick in job openings, minimal growth in new home sales and a decrease in single-family home starts. The gap between single-family home construction and household construction is set to widen to 6.5 million between 2012 and 2022. Last year, an additional 2.1 million homes were built, while home builders began construction of nearly 1 million single-family homes.

While it's typical to see a decline in construction jobs during the winter, the industry, especially residential homebuilding, is being hit by the Federal Reserve's rate hikes designed to curb inflation.

"The March employment report could signal growing economic weakness in the coming months," said Anirban Basu, Chief Economist at Associated Builders & Contractors.

While the non-residential construction industry lost fewer than 2,000 jobs, the private sector suffered more weakness in addition to jobs in publicly financed construction categories. Most affected by concerns about the country's banking system.

Government data from January showed a nearly 50% month-over-month drop in construction job openings, the largest monthly decline in construction job openings since the data began to be collected 20 years ago.

Job openings rose in February, according to an analysis of BLS data from ABC. Openings increased by 129,000 in February, but are still down 9,000 from last year.

Industry experts point to delayed effects from the Fed's rate hike as an explanation for why the decline was so sharp after a surge in jobs during the winter.

Basu said, "While the country is progressing economically, adverse conditions are being created." 

Recession remains a likely outcome within the next 12 months. Contractors generally report healthy backlogs and confidence about the next six months, but the industry could be bracing for meaningfully weaker conditions in 2024.

Experts point to other market conditions, such as higher mortgage rates and increased prices as other signs that the market's pent-up demand may even out at the end of the year. Builder confidence rose in March, according to the National Association of Home Builders, although the outlook is unclear.

Confidence in the market for newly built single-family homes rose two points in March, marking the third consecutive monthly increase in builder sentiment levels.

“Even as builders continue to deal with persistently high construction costs and material supply chain disruptions, they continue to report strong demand growth as buyers await a drop in interest rates and upgrade existing New homes are turning more into the market because of a lack of inventory," said Alicia Huey, president of the National Association of Home Builders, a custom home builder and developer from Birmingham, Ala.

But given the recent volatility concerns in the banking system and volatility in interest rates, builders are highly uncertain about the near- and medium-term outlook.