The Changing Face of Labor
Across the U.S., builders are beginning to feel the ripple effects of a labor force in transition. For decades, small and mid-sized homebuilders have relied on a deep network of subcontractors—many powered by immigrant labor—to frame, roof, and finish their homes. That model to be tested and strained. A combination of subcontractor demographic “aging out of the industry,” tighter immigration enforcement, and rising compliance requirements is reshaping how builders get homes built. Aging Out: The Shrinking Labor Base The construction workforce has been contracting for years. According to the Home Builders Institute’s Spring 2024 Construction Labor Market Report, the U.S. will need roughly 723,000 new construction workers per year just to meet current demand in residential construction. The average age of skilled tradespeople continues to rise, with many nearing retirement and too few younger workers entering the pipeline. Many who exited during the Great Recession never returned. Meanwhile, vocational and technical programs—critical sources of new trades talent—remain underfunded and unable to expand enrollment at the pace required. Immigration: A Critical Pressure Point Immigrants make up about 25% of the national construction workforce, and roughly 31% of trades workers such as carpenters, roofers, and drywall installers are foreign-born, according to the
Builders vs. Rising Costs
Builders are fighting back to reduce hard costs, at least that’s what we tell each other. With a “back to basics ” attitude, we rationalize options, build faster, and discount harder. We find ourselves inviting our “vendor partners” to share in the pain, or at least in our reduced margins. Across the U.S., homebuilders are caught in a vice. Material, labor, and financing costs continue to rise—even as buyers face affordability ceilings driven by high mortgage rates and a decade of underbuilt housing stock. The result is a market where margins are thinner, timelines are longer, and risk management is becoming as critical as construction management. While some builders have adapted with scale efficiencies, others—particularly regional and mid-size operators—are struggling to sustain production levels. The broader consequence is a persistent undersupply of new housing units and continued upward pressure on prices, rent, and land values. The most immediate pain point remains financing. Mortgage rates hovering near 7%–8% have dampened demand, but the cost of capital for builders has risen even faster. Construction loans, typically short-term and floating-rate, have seen rate adjustments that push project feasibility to the brink. Private equity and bank lenders are demanding higher reserves and tighter covenants,