Construction employment is continuing to lag, with severe labor shortages hampering the homebuilding industry. 

After mostly holding flat for the past six months, construction employment grew by 20,000 in September, the Labor Department reports. However, about 75 percent of those gains were related to nonresidential construction. Home building jobs grew by only 5,400 in September. 

“Home building firms and subcontractors have chosen not to hire additional workers, but simply use the people they have more intensely,” says David Crowe, chief economist for the National Association of Home Builders. Builders are showing that they prefer to pay existing workers overtime rather than hire more workers. They are increasingly concerned about the toll rising interest rates and the economy may take on the industry in coming months, Crowe says. 

New-home construction remains constrained. Historically, about 1.7 million to 1.8 million housing units are added each year. But less than 1 million housing units will be added in 2013, and only about 1.15 million will be added in 2014, according to Freddie Mac’s U.S. Economic and Housing Market Outlook for October.

"The inability of home construction to rebound has kept the economy from reaching normal levels of economic growth,” the report notes. “Construction employment alone is 1 to 2 million below trend levels, which is roughly 1 year of non-farm payroll growth at current levels.”

Source: “Over 1 million Construction Jobs Still Needed For 'Normal' Growth,” Mortgage News Daily (Oct. 22, 2013) and “Housing Construction Gains Not Translating to Much Hiring,” The Wall Street Journal (Oct. 22, 2013)