Fitch: Construction Labor Shortage Could Affect Recovery

It is a possible a shortage in skilled labor for housing construction jobs could slow down a recovery in the sector, said Fitch Ratings.

“A deficit in workers, particularly skilled trades, combined with a lack of available finished lots and continued tight mortgage qualification standards could dampen growth momentum, but won't likely lead to disastrous national numbers for housing, we believe,” a report from Fitch noted.

A shortage of workers is lengthening the time needed to build a new home. One of the items expected to help mitigate the sales inventory shortage along with current homeowners deciding to sell is new homes coming on line.

Fitch cited Bureau of Labor Statistics data which find the number of construction workers slipped from over 8 million during the boom to 5.8 million as of May.

“We believe the degree of labor shortage will depend on the pace of recovery. If the pace is moderate (which we expect) in 2013 and 2014, the shortage will only be prominent in certain markets. But, if we have a more V-shaped recovery, the labor shortages will probably be more pronounced.

“Fitch projects housing starts to be about 1.1 million in 2014. If housing starts revert to more normalized levels (1.5 million), labor shortages may last longer as the addition of new skilled workers remains challenging. In addition, substantial improvement in the non-residential construction market could exacerbate the labor shortage,” the ratings agency said.