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Home Building Employment across States and Congressional Districts in 2023

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As the number of housing units under construction peaked in 2023, the industry set another record employing close to 11.4 million people, including self-employed workers. NAHB estimates that out of this total, 4.7 million people worked in residential construction, accounting for 2.9% of the U.S. employed civilian labor force. Home building in the Mountain Division, as well as in Vermont and Florida, stand out as generating a significantly higher share of local jobs, with residential construction generating more than 5% of all jobs in Idaho and Montana. NAHB’s analysis also identifies congressional districts where home building accounts for particularly high employment levels and share of local jobs.

Not surprisingly, the most populous state—California—also has the most residential construction workers. Over 640,000 California residents worked in home building in 2023, accounting for 3.4% of the state employed labor force.

Fast-growing Florida comes in second with 468,000 residential construction workers. The state stands out for registering one of the fastest growing populations since the start of the pandemic, which undoubtedly boosted housing and construction workforce demand. Florida’s large stock of vacation and seasonal housing further boosts demand for residential construction workers. As a result, in Florida, residential construction workers account for a relatively high 4.4% of the employed labor. Even though this share is well above the national average (2.9%), it is significantly lower than in 2006, when Florida registered the highest share among all 50 states and the District of Columbia, at 6.5%.

Similar to Florida, fast-growing states with a high prevalence of seasonal, vacation homes top the list of states with the highest share of residential construction workers in 2023. Three states in the Mountain Division – Idaho, Montana, and Utah – take the top spots on the list with 5.5%, 5.1% and 4.9% of the employed labor force working in home building. Vermont is next on the list with a share of 4.6%.  

As of 2023, the average congressional district has about 10,800 residents working in residential construction, but that number is often significantly higher. In Idaho’s 1st Congressional District, over 30,000 residents are in home building and Utah’s 2nd Congressional District has over 25,000 residents working in home building. 

Eight other congressional districts have over 20,000 residents working in residential construction – Florida’s 26th, Utah’s 4th, Idaho’s 2nd, Florida’s 17th, Arizona’s 3rd, Utah’s 1st, Florida’s 28th, and California’s 29th. 

By design, Congressional districts are drawn to represent roughly the same number of people. So generally, large numbers of residential construction (RC) workers translate into high shares of RC workers in their district employed labor forces.  Idaho’s 1st tops this list as well, registering the highest share of residential construction workers in the employed labor force, 6.4%. Florida’s 17th is a close second with 6.3% of the district labor force employed in home building. Next on the list are two Mountain division districts – Montana’s 1st and Utah’s 2nd – with shares of 5.8%, followed by two Florida’s districts – 19th (5.7%) and 26th (5.6%). California’s 29th (5.4%) and 39th (5.3%) also register shares far exceeding the national average of 2.9%.   

At the other end of the spectrum there are several districts that contain parts of large urban areas: the District of Columbia, the 12th of New York, located in New York City, Pennsylvania’s 3rd that includes areas of the city of Philadelphia, Georgia’s 5th that includes most of Atlanta, and among others, Illinois’s 7th and 9th, covering parts of Chicago. Most residents in these urban districts tend to work in professional, scientific, and technical services. The District of Columbia stands out for having the lowest number of RC workers, with just 1,400 residing in the district. At the same time, it has a disproportionally large share of public administration workers. The 12th District of New York and the 7th District of Illinois are home to a very large group of finance and insurance workers. Meanwhile, in Pennsylvania’s 2nd, more than a third of residents work in health care and educational services. 

The NAHB residential construction employment estimates include self-employed workers. Counting self-employed is particularly important in the home building industry since they traditionally make up a larger share of the labor force than in the U.S. total workforce.  

The new NAHB home building employment estimates only include workers directly employed by the industry and do not count jobs created in related industries– such as design and architecture, furniture making, building materials, landscaping, etc.  As a result, the estimates underestimate the overall impact of home building on local employment. 

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Softwood Lumber Prices Continue to Lead Price Growth for Building Materials

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Prices for inputs to new residential construction—excluding capital investment, labor, and imports—were up 0.5% in February according to the most recent Producer Price Index (PPI) report published by the U.S. Bureau of Labor Statistics. The increase in January was revised downward to 1.1%. The Producer Price Index measures prices that domestic producers receive for their goods and services, this differs from the Consumer Price Index which measures what consumers pay and includes both domestic products as well as imports.

The inputs to the New Residential Construction Price Index grew 0.7% from February of last year. The index can be broken into two components—the goods component increased 1.2% over the year, while services decreased 0.1%. For comparison, the total final demand index, which measures all goods and services across the economy, increased 3.2% over the year, with final demand with respect to goods up 1.7% and final demand for services up 3.9% over the year.

Input Goods

The goods component has a larger importance to the total residential construction inputs price index, representing around 60%. For the month, the price of input goods to new residential construction was up 0.6% in February.

The input goods to residential construction index can be further broken down into two separate components, one measuring energy inputs with the other measuring goods less energy inputs. The latter of these two components simply represents building materials used in residential construction, which makes up around 93% of the goods index.

Energy input prices grew 2.6% between January and February but remained 8.5% lower compared to one year ago. Building material prices were up 0.5% between January and February while they were up 2.0% compared to one year ago.

Among materials used in residential construction, lumber and wood products ranks 3rd in terms of importance for the Inputs to New Residential Construction Index. Nonmetallic mineral products and metal products rank 1st and 2nd, respectively. The top lumber and wood products include general millwork, prefabricated structural members, not-edge worked softwood lumber, softwood veneer/plywood and hardwood veneer/plywood. Prices for these wood commodities experienced little growth for most of 2024. Currently, softwood lumber prices were 11.7% higher compared to one year ago while on a monthly basis, prices rose 3.0%. This marks the fourth straight month where yearly price growth was above 10% for softwood lumber.

Input Services

While prices of inputs to residential construction for services were down 0.1% over the year, they were up 0.4% in February from January. The price index for service inputs to residential construction can be broken out into three separate components: a trade services component, a transportation and warehousing services component, and a services excluding trade, transportation and warehousing component. The most significant component is trade services (around 60%), followed by services less trade, transportation and warehousing (around 29%), and finally transportation and warehousing services (around 11%). The largest component, trade services, was down 1.5% from a year ago. The services less trade, transportation and warehousing component was up 1.6% over the year.  Lastly, prices for transportation and warehousing services advanced 2.2% compared to February last year.

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Gains for Custom Home Building

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NAHB’s analysis of Census Data from the Quarterly Starts and Completions by Purpose and Design survey indicates gains for custom home builders after a period slight softening of market share. The custom building market is less sensitive to the interest rate cycle than other forms of home building.

There were 47,000 total custom building starts during the fourth quarter of 2024. This marks a 7% increase compared to the fourth quarter of 2023. Over the last four quarters (2024 as a whole), custom housing starts totaled 181,000 homes, just below a 2% increase compared to the prior four quarter total (178,000 in 2023).

Currently, the market share of custom home building, based on a one-year moving average, is approximately 18% of total single-family starts. This is down from a prior cycle peak of 31.5% set during the second quarter of 2009 and the 21% local peak rate at the beginning of 2023, after which spec home building gained market share.

Note that this definition of custom home building does not include homes intended for sale, so the analysis in this post uses a narrow definition of the sector. It represents home construction undertaken on a contract basis for which the builder does not hold tax basis in the structure during construction.

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After Declines in 2024, Building and Design Firms Expect Growth

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Residential construction and design professionals have an optimistic outlook for 2025, with more than 3 in 5 firms reporting positive expectations for overall business performance, according to the just-released 2025 U.S. Houzz State of the Industry report. Businesses across industry sectors anticipate high revenue growth rates, heightened demand for their services and improved local and national economies, even as they brace for rising costs and worsening labor shortages. This widespread optimism follows a year marked by unexpected revenue and profitability declines industrywide.

“Home professionals are entering 2025 with renewed confidence and expectations for growth in both revenue and profitability after navigating two difficult years,” Houzz staff economist Marine Sargsyan says. “Pros report that they’ve implemented new processes for operational efficiency and client communication and made strategic investments in technology to address the challenges they faced last year. This will better position them for an anticipated increase in demand, enhance their resilience amidst potential tariffs and leverage expected improvements in both local and national economic conditions.”

Here’s what the report reveals about firms’ expectations for 2025 and performances in 2024.



This article was originally published by a www.houzz.com . Read the Original article here. .

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Fringe Benefits Add 18% to Home Building Payroll

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In the home building industry, fringe benefits add an additional 18% to employees’ compensation on top of payroll, according to NAHB’s analysis of the latest 2022 Economic Census data. The rates vary across residential construction sub-sectors with single-family and multifamily general contractors contributing an average of 20% on top of payroll. Fringe benefits in residential remodeling and for-sale building average 19% and 16%, respectively.

Total fringe benefits consist of legally required and voluntarily provided benefits. The legally required component includes employers’ contribution to Social Security and Medicare, unemployment insurance, worker’s compensation insurance, and state-mandated temporary disability and other state-specific contributions. Since these benefits are mandatory by law, it may seem counter-intuitive to view them as “fringe” benefits. Nevertheless, the Economic Census counts them as “legally required fringe benefits” paid on top of payroll.

In 2022, legally required fringe benefits contributed by single-family general contractors and remodelers amounted to an additional 13% on top of payroll. The average rate for multifamily general contractors and for-sale builders was 10% and 9%, respectively. Averaged across the four subsectors of home building, legally required benefits amounted to just under 12% of payroll.

Voluntarily provided fringe benefits include expenditures paid by employers for life insurance premiums, pension plans, insurance premiums on hospital and medical plans, welfare plans, and union negotiated benefits. Other perks provided by employers, such as paid holidays, vacations, sick pay, bonuses, and jury pay, may seem like valuable “fringe” benefits but are technically counted in payroll.

In 2022, voluntary fringe benefits provided by multifamily general contractors amounted to an additional 10% on top of payroll.  In the case of single-family contractors and for-sale builders, these benefits added 7% to compensation. The rate was lower for residential remodelers, where voluntary benefits amounted to 6% of payroll. Averaged across the four sub-sectors of home building, the voluntarily provided benefits approached an added cost of 7% on top of payroll.

In addition to the four residential construction subsectors discussed above, the home building industry also includes land developers and specialty trade contractors (STC). Since the Economic Census does not differentiate between residential and non-residential specialty trade contractors, this combined subsector is not included in the home building chart above. Nevertheless, the latest Economic Census shows that the fringe benefit rates were highest among specialty trade contractors – 28%, equally split between legally required and voluntary.

Among other things, the differences in the fringe benefit rates reflect variations in state-mandated regulations, size and legal form of companies, involvement in federally funded projects, unionization of workers, and employee participation rates in health and pension plans. For example, depending on the legal form of organization, accounting principles are different and can affect the estimated fringe benefit rates. For corporations, payroll includes compensation of executives, but for unincorporated businesses, such as individual proprietorships and partnerships, payroll excludes profit and other compensation of proprietors or partners. In addition, partners and proprietors may not be ineligible for the complete benefits package they offer to employees, also affecting the estimated fringe benefit rates for their businesses.

The data used in this analysis come from the Economic Census available only every five years. The Economic Census, like many other federal statistics programs, collects data only on establishments with payroll employees. In construction, an establishment operates continually at a single physical location but typically manages more than one project or job. A large building company may operate at more than one location but would file a separate report for each location or establishment.

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Building Material Prices Increase in November Led by Lumber

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Prices for inputs to new residential construction—excluding capital investment, labor, and imports—were unchanged in November according to the most recent Producer Price Index (PPI) report published by the U.S. Bureau of Labor Statistics. Compared to a year ago, this index was up 0.7% in November after rising 0.3% in October.

The inputs to the new residential construction price index can be broken into two components­—one for goods and another for services. The goods component increased 1.2% over the year, while services decreased 0.3%. For comparison, the total final demand index increased 3.0% over the year in November, with final demand with respect to goods up 1.1% and final demand for services up 3.9% over the year.

Goods

The goods component has a larger importance to the total residential construction inputs price index, representing around 60%. The price of input goods to new residential construction was unchanged in November from October. The input goods to residential construction index can be further broken down into two separate components, one measuring energy inputs with the other measuring goods less energy inputs. The latter of these two components simply represents building materials used in residential construction, which makes up around 93% of the goods index.

Prices for inputs to residential construction, goods less energy, were up 2.3% in November compared to a year ago. This year-over-year increase was larger than in October (2.0%) and was the largest year-over-year increase since June earlier this year. The growth rate in November 2023 was 1.2%. The index for inputs to residential construction for energy fell 10.9% year-over-year in November, the fourth straight yearly decline in input energy prices.  

The graph below focuses on the data since the start of 2023 for residential goods inputs. Energy prices have continued to fall over the past year, with only two periods of growth in 2024.

At the individual commodity level, excluding energy, the five commodities with the highest importance for building materials to the new residential construction index were as follows: ready-mix concrete, general millwork, paving mixtures/ blocks, sheet metal products, and wood office furniture/store fixtures. Across these commodities, there was price growth across the board compared to last year. Ready-mix concrete was up 3.9%, wood office furniture/store fixtures up 3.4%, general millwork up 2.8%, paving mixtures/blocks up 1.6% and sheet metal products up 0.5%. Unsurprisingly, given how energy prices have trended this year, the input commodity that had the largest fall in price over the year was No. 2 diesel, which was down 20.6%.

Among lumber and wood products, the commodities with the highest importance to new residential construction were general millwork, prefabricated structural members, softwood veneer/plywood, softwood lumber (not edge worked) and hardwood veneer/plywood. The input commodity in residential construction that had the highest year-over-year percent change (across all input goods) in November was softwood lumber (not edge worked), which was 13.7% higher than November 2023. This is of particular note because none of the other top wood commodities had a year-over-year change above 3% in November. Lumber supplies have been driving prices higher over the past month as the sawmill industry continues to adjust to the mill closures that occurred earlier this year. Higher lumber demand as residential construction rebounds due to lower interest rates is likely to continue to increase lumber prices.

Services

Prices of inputs to residential construction for services, were unchanged in November from October. The price index for service inputs to residential construction can be broken out into three separate components: a trade services component, a transportation and warehousing services component, and a services excluding trade, transportation and warehousing component. The most significant component is trade services (around 60%), followed by services less trade, transportation and warehousing (around 29%), and finally transportation and warehousing services (around 11%). The largest component, trade services, compared to last year was down 1.2% in November after declining 1.5% in October.

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Flat Conditions for Custom Home Building

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NAHB’s analysis of Census Data from the Quarterly Starts and Completions by Purpose and Design survey indicates relatively flat conditions for custom home builders after a period slight softening of market share due to declining mortgage interest rates. However, post-election stock market gains should support custom building at the end of 2024 and going into 2025.

There were 48,000 total custom building starts during the third quarter of 2024. This marks a 4% decline compared to the third quarter of 2023. Over the last four quarters, custom housing starts totaled 178,000 homes, just below a 1% decline compared to the prior four quarter total (179,000).

After share declines due to a rise in spec building in the wake of the pandemic, the market share for custom homes increased until 2023 and then entered a period of retrenchment. As measured on a one-year moving average, the market share of custom home building, in terms of total single-family starts, has fallen back to 17%. This is down from a prior cycle peak of 31.5% set during the second quarter of 2009 and a 21% local peak rate at the beginning of 2023.

Note that this definition of custom home building does not include homes intended for sale, so the analysis in this post uses a narrow definition of the sector. It represents home construction undertaken on a contract basis for which the builder does not hold tax basis in the structure during construction.

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Building Material Prices Increase While Other Input Prices Fall

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Prices for inputs to new residential construction—excluding capital investment, labor, and imports—decreased 0.2% in October according to the most recent Producer Price Index (PPI) report published by the U.S. Bureau of Labor Statistics. Compared to a year ago, this index is up 0.3% in October after a decline of 0.1% in September.

The inputs to the new residential construction price index can be broken into two components­—one for goods and another for services. The goods component increased 0.7% over the year, while services decreased 0.4%. For comparison, the total final demand index increased 2.4% over the year for October, with final demand with respect to goods up 0.2% and final demand for services up 3.5% over the year.

Input Goods

The goods component has a larger importance to the total residential construction inputs price index, representing around 60%. The price of input goods to new residential construction was up 0.3% in October from September. The input goods to residential construction index can be further broken down into two separate components, one measuring energy inputs with the other measuring goods less energy inputs. The latter of these two components simply represents building materials used in residential construction, which makes up around 93% of the goods index.

Prices for inputs to residential construction, goods less energy, were up 2.0% in October compared to a year ago. This year-over-year increase was larger than in September (1.4%) and was the first percentage point increase in the year-over-year rate since April. The growth rate in October 2023 was 0.8%. The index for inputs to residential construction for energy fell 13.1% year-over-year in October, the third straight yearly decline in input energy prices.

The graph below focuses on the data since the start of 2023 for residential goods inputs. Energy prices have continued to fall over the past year, with only two periods of growth in 2024.

At the individual commodity level, excluding energy, the five commodities with the highest importance for building materials to the new residential construction index were as follows: ready-mix concrete, general millwork, paving mixtures/ blocks, sheet metal products, and wood office furniture/store fixtures. Across these commodities, there was price growth across the board compared to last year. Ready-mix concrete was up 3.7%, wood office furniture/store fixtures up 3.6%, general millwork up 2.8%, paving mixtures/blocks up 2.4% and sheet metal products up 0.6%.

Input Services

Prices of inputs to residential construction for services fell 1.0% in October from September. The price index for service inputs to residential construction can be broken out into three separate components: a trade services component, a transportation and warehousing services component, and a services excluding trade, transportation and warehousing component. The most significant component is trade services (around 60%), followed by services less trade, transportation and warehousing (around 29%), and finally transportation and warehousing services (around 11%). The largest component, trade services, compared to last year was down 1.5% in October after increasing 0.6% in September. The decline in October was the first decline since August 2023, when the trade services index was down 1.2%.

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Residential Building Wages Grow at Unprecedented Rate

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Wages for residential building workers grew at a fast pace of 9.9% in September, following a 10.8% gain in August. These year-over-year growth rates in the past four months were unprecedented in the history of the data series since 1990. After a 0.3% increase in June 2023, the YOY growth rate for residential building worker wages has been trending higher over the past year.

The ongoing skilled labor shortage in the construction labor market and lingering inflation impacts account for the recent acceleration in wage growth. However, the demand for construction labor remained weaker than a year ago. As mentioned in the latest JOLTS blog, the number of open construction sector jobs fell from a revised 328,000 in August to a softer 288,000 in September. Nonetheless, the ongoing skilled labor shortage continues to challenge the construction sector.

According to the Bureau of Labor Statistics report, average hourly earnings for residential building workers was $33.51 per hour in September 2024, increasing 9.9% from $30.5 per hour a year ago. This was 19.2% higher than the manufacturing’s average hourly earnings of $28.12 per hour, 14.7% higher than transportation and warehousing ($29.21 per hour), and 8.1% lower than mining and logging ($36.46 per hour).

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Multifamily Housing: Distribution, Building Size, and Gross Rent Across Congressional

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Approximately 27% of the national housing stock consists of multifamily homes—defined as residential buildings with multiple separate housing units within one structure. According to the 2023 American Community Survey 1-year estimates, these units range from small duplexes, triplexes, and quadplexes (2 to 4 units) to medium-sized buildings (5 to 49 units) and large complexes (50 or more units).

While most congressional districts have multifamily housing shares between 10% to 20% of total housing units, this proportion varies widely, from as low as 8% to as high as 98%. The map below illustrates the distribution of multifamily housing stock across congressional districts with larger shares indicated by bigger bubble size. This visualization shows that districts with the largest share of multifamily units are, unsurprisingly, concentrated in densely populated urban areas.

New York leads in this regard, with its 12th and 13th Districts – both encompassing upper and midtown Manhattan – having almost exclusively multifamily units at 98% each. In fact, eight out of the top 10 districts with the largest share of multifamily housing are in New York. Other areas with large shares include New Jersey’s 8th District, also within the New York metropolitan area, and Massachusetts’s 7th District that includes Boston. At the lower end of the distribution, North Carolina’s 8th District has only 8% multifamily units, while Michigan’s 2nd and 9th Districts, Arizona’s 9th District, and Florida’s 12th District all have around 9% multifamily units.

Building Sizes in Multifamily Units

In most congressional districts, multifamily units tend to be on the smaller side, with the majority consisting of buildings with 5 to 19 units, followed by those with 2 to 4 units. Duplexes, triplexes, and quadplexes (2 to 4 units) are especially common in the Northeast, various Mountain states, and parts of California. Apart from Illinois’s 4th District, which has the highest share of small multifamily units (70%), the remaining top five districts with the largest shares of 2 to 4 unit buildings are all in New York, each exceeding 60%.

Buildings with 5 to 19 units are more prevalent across the South and Midwest, with Maryland’s 2nd, 3rd and 4th Districts owning majority shares of this building type with 59%, 62% and 61%, respectively. High-density areas like New York’s 12th District, Florida’s 27th District – located within Miami-Dade County – and Washington, D.C. (at large), tend to have the largest multifamily (50 or more) buildings. North Dakota (at large) and Minnesota’s 6th District stand out as the only two congressional districts where the majority of multifamily buildings have between 20 to 49 multifamily units.

Gross Median Rent and Renter Cost Burden

Multifamily units are predominantly rented rather than owned, with 86% being occupied by renters. This trend holds across all multifamily types, with larger buildings generally more likely to be rental properties, while condominiums (owner-occupied units) are often smaller buildings. A Fannie Mae study on the multifamily market found that larger properties typically command higher monthly rents, especially in major metropolitan areas. The chart below corroborates this, showing that districts with higher shares of large multifamily buildings (50 or more units) also have higher median monthly rents (including utilities and fuel). However, lower median rents don’t always equate to more affordability, as even low-rent areas can have high renter cost burdens due to lower income levels. For example, New York’s 12th District has the highest median rent at $3,121, with 43% of renters burdened (spending over 30% of income on housing costs), a rate matched by Kentucky’s 5th District, where the median rent is only $727. Overall, despite rent prices moderating (see Real Rent Index), rental cost burdens remain high across the country, with only 23 of 436 congressional districts (including D.C.) having fewer than 40% of renter households burdened by housing costs.

Additional housing data for your congressional district are provided by the US Census Bureau here.

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