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NAHB estimates that $184 billion worth of goods were used in the construction of both new multifamily and single-family housing in 2023. Additionally, we estimate that $13 billon of those goods were imported from outside of the U.S. These figures lead to 7% of all goods used in new residential construction originating from a foreign nation. This data come from the BEA input-output accounts, which reveals important details of numerous industries across the U.S. detailing what products they produce, use and import in the economy. The latest tables are from 2017 and the data is adjusted to 2023 dollar value.
Import use varies significantly by type of building product. Shown above are the ten most import reliant products that are used in new residential construction. These products are defined by North American Industry Classification System (NAICS).
The U.S Census Bureau reports data on international trade of goods by NAICS definitions. With this, we can locate which nations are responsible for importing products used in residential construction into the U.S. Using the commodities that are used in residential construction, a significant share comes from China, at 27%. Mexico was the second most important nation with around 11% followed by Canada at 8%. Shown below are the countries with the 10 highest shares along with the remaining 27% from countries outside the top 10.
Tariff Impact
During the election campaign, President Trump promised the enactment of a tariff plan ranging from 10%-20% on imported goods, with 60% tariffs on imports from China. A tariff is essentially a tax on an imported good, meaning the importer pays an additional tax for importing such an item from another country. For example, say a business in the United States needed to purchase a $100 worth of screws from China. With a 60% tariff, the business would then need to pay an additional $60 to the U.S. Government to receive the screws. The exporter in China would still receive the $100 from the business and not pay the added tariff costs. The tariff cost falls on the importer, who would absorb the higher costs through lower profit margins or raising their own prices for consumers.
Without additional detail for these tariff proposals, it is difficult to estimate the impact of these tariffs. Using our best estimate, a 10% tariff on all imports with a 60% tariff on imports directly from China would result in a $3.2 billion increase in the cost of imported building materials used in residential construction. By product, the largest increase in cost would be for household appliances, where 54% of imports come from China, this tariff adds $670 million for these imported products. Additionally, a 20% tariff coupled with 60% imports from China would result in $4.2 billion in added cost of imported residential building products.
From Canada, the U.S. imports a significant amount of wood related products. In 2023, 70% of sawmill and wood product imports came from Canada. Many of these wood products from Canada are already subject to tariffs, with the current rate at 14.5%. Total imports of sawmill and wood products from Canada in 2023 was $5.8 billion. The highest valued import from Canada was nonferrous metals, totaling $17.6 billion in 2023.
Turning to Mexico, 71% of lime and gypsum products imported in 2023 originated from Mexico. While this share is particularly high, the total value of imports in 2023 of lime and gypsum was only $456 million. The highest valued import from Mexico at $28.6 billion in 2023 was computer equipment, where imports from Mexico made up 23% of total imports of computer equipment in 2023.
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As reported in a previous post, immigrants make up one in four workers in the construction industry. The share of immigrants is significantly higher (32.5%) among construction tradesmen. In some states, reliance on foreign-born labor is particularly evident, with immigrants comprising over 40% of the construction workforce in California and New Jersey, and 38% – in Texas and Florida.
According to the government’s system for classifying occupations, the construction industry employs workers in about 390 occupations. Out of these, only 28 are construction trades, yet they account for almost two thirds of the construction labor force. The other one-third of workers are in finance, sales, administration and other off-site activities.
The concentration of immigrants is particularly high in construction trades essential for home building, such as plasterers and stucco masons, drywall/ceiling tile installers (61%), roofers (52%), painters (51%), carpet/floor/tile installers (45%).
The two most prevalent construction occupations, laborers and carpenters, account for over a quarter of the construction labor force. A third of all carpenters and 42% of construction laborers are of foreign-born origin. These trades require less formal education but consistently register some of the highest labor shortages in the NAHB/Wells Fargo Housing Market Index (HMI) and NAHB Remodeling Market Index (RMI) surveys.
In the latest February 2024 HMI Survey, 65% of builders reported some or serious shortage of workers performing finished carpentry. Looking at other tradesmen directly employed by builders, the shortages of bricklayers and masons are similarly acute, despite a high presence of immigrant workers in these trades.
Labor shortages are also high among electricians, plumbers and HVAC technicians, with over half of surveyed builders reporting shortages of these craftsmen. In contrast, these trades demand longer formal training, often require professional licenses and attract fewer immigrants.
More than half (53%) of the three million immigrant construction workers reside in the four most populous states in the U.S. – California, Texas, Florida, and New York. California and Texas have over half a million foreign-born construction workers each. Combined, these two states account for over a third (35%) of all immigrant construction workers. Florida and New York combined account for an additional 18%.
These are not only the most populous states in the U.S., but as traditional gateway states, they are also particularly reliant on foreign-born construction labor. Immigrants comprise 41% of the construction workforce in California. In Florida and Texas, 38% of the construction labor force is foreign-born. In New York, 37% of construction industry workers come from abroad.
The reliance on foreign-born labor continues to spread outside of these traditional immigrant magnets. This is evident in states like New Jersey, that registered the second highest share of immigrant workers, 40%, in 2023, closely following California. Nevada and Maryland, where immigrants (as of 2023) account for over a third of the construction labor force (36%) also illustrate spreading reliance on immigrant labor.
In Georgia, Connecticut, North Carolina, Virginia, Arizona, Massachusetts, and Illinois, more than a quarter of construction workers are foreign-born. At the other end of the spectrum, seven states – Montana, North and South Dakota, Vermont, Maine, West Virginia, and Alaska – have share of immigrant workers of less than 5%.
Because immigrant workers are disproportionately concentrated within the construction trades, immigrant presence among craftsmen is higher than their overall representation in the industry across all states. In California and DC, immigrant workers account for more than half of all tradesmen in construction. In New Jersey and Texas, these shares are similarly high at 49%. In Maryland, Nevada, Florida, New York and Georgia, between 40% and 47% of craftsmen are foreign-born.
While most states draw the majority of immigrant foreign-born workers from the Americas, Hawaii relies more heavily on Asian immigrants. European immigrants are a significant source of construction labor in New York, New Jersey and Illinois.
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The residential construction industry plays a crucial role in driving economic growth and local community development. It has a lasting impact on local communities by creating jobs, improving infrastructure, boosting local businesses, and enhancing property values.
The residential construction industry is more reliant on labor than capital in the United States. As of October 2024, about 3.4 million people work in the residential construction industry in the United States, with 957,000 builders and 2.4 million residential specialty trade contractors.
The NAHB analysis of the Quarterly Census of Employment and Wages (QCEW) data provides an insight into employment and establishment concentration of the residential construction industry across metro areas (MSA).
Location quotients (LQ) are ratios that compare the concentration of the residential construction industry within a metro area to the concentration of the industry nationwide. LQs are used in this article to evaluate the employment and establishment concentration of the residential construction industry in local areas.
Employment
The March 2024 QCEW data indicates that employment in the residential construction industry, while found throughout the country, was more highly concentrated in some metro areas than others.
Among 387 metro areas, employment LQs ranged from 0.02 to 3.99. Cape Coral-Fort Myers, FL had the highest employment concentration of the residential construction industry with an LQ of 3.99. It was followed by Naples-Marco Island, FL (LQ: 3.47) and Bozeman, MT (LQ: 3.12).
Florida, experiencing a rapid growth in population, reported a relatively high employment concentration in residential construction. All metro areas in Florida had a higher employment concentration than the nation’s concentration. Moreover, half of the top ten metro areas with the highest employment concentrations of the residential construction industry were in Florida.
Various metro areas in the Mountain Division also have a high reliance on the residential construction industry for employment. Bozeman, MT (LQ: 3.12), St. George, UT (LQ: 3.03), Coeur d’Alene, ID (LQ: 2.51), and Provo-Orem-Lehi, UT (LQ: 2.35) were ranked in the top ten markets with a higher employment concentration of the residential construction industry.
Metro areas in the South reported the three lowest employment LQs of the residential construction industry. The lowest was Owensboro, KY with a LQ of 0.02, followed by Dalton, GA (LQ: 0.03) and Eagle Pass, TX (LQ: 0.05).
Establishment
On aggregate, New York-Newark-Jersey City, NY-NJ, Los Angeles-Long Beach-Anaheim, CA, and Miami-Fort Lauderdale-West Palm Beach, FL were the three metro areas that not only had the most employment in residential construction but also had the largest number of residential construction establishments among all metro areas. However, these three metro areas didn’t have higher establishment concentrations of the residential construction industry than the nation.
Among all the 387 metro areas, 104 of them had a higher establishment concentration of the residential construction industry than the nation. St. George, UT had the highest establishment concentration of the residential construction industry, which was more than three times that of the nation, followed by Barnstable Town, MA (LS: 2.42) and Cape Coral-Fort Myers, FL (LQ: 2.38).
The three metro areas in the South that reported the lowest employment LQs of the residential construction industry also had the lowest establishment LQs of the residential construction industry.
For more information on QCEW, please check the “Handbook of Methods” published by BLS.
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After a period of slowing associated with declines for some elements of the residential construction industry, the count of open construction sector jobs trended lower in the October data, per the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey (JOLTS). The data indicates the demand for construction labor market remains weaker than a year ago.
In contrast, after revisions, the number of open jobs for the overall economy increased from 7.37 million to 7.74 million in October. Nonetheless, this is notably smaller than the 8.69 million estimate reported a year ago and is a sign of a softening aggregate labor market. Previous NAHB analysis indicated that this number had to fall below 8 million on a sustained basis for the Federal Reserve to feel more comfortable about labor market conditions and their potential impacts on inflation. With estimates remaining below 8 million for national job openings, the Fed is underway easing credit conditions.
The number of open construction sector jobs fell from a revised 258,000 in September to a softer 249,000 in October. Elements of the construction sector slowed in prior months as tight Fed policy persisted. The October reading of opening, unfilled construction jobs is lower than that registered a year ago: 413,000.
The construction job openings rate fell back to 2.9% in October and continues to trend lower, albeit with a fair amount of statistical month-to-month noise in the recent data.
The layoff rate in construction moved lower to 1.2% in October after a 2% rate in September. This was the lowest layoff rate for construction in the data series (going back to late 2000). The quits rate in construction increased to 1.9% in October.
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Residential construction has remained in low density suburbs and outlying areas, according to the National Association of Home Builders’ latest release of the Home Building Geography Index (HBGI). This trend is driven by persistent factors that continue to affect housing affordability including a limited supply of buildable lots, rising construction costs, and a shortage of skilled labor. By focusing on low-density areas, developers aim to lower some of the high costs associated with building in high density areas.
Single-family
All HBGI-tracked geographies continued to post growth in the third quarter as single-family starts are poised to be higher than last year. The HBGI is constructed using permit data, which has continued to post higher volumes than last year despite residential construction dealing with persistent structural issues.
Among the HBGI geographies, the highest growth in the third quarter of 2024 was registered in small metro core counties, which increased 16.3% on a year-over-year four quarter moving average basis. The market with the lowest level of growth was micro counties which were up 6.5% on a year-over-year four quarter moving average.
In addition to the main HBGI geographies, new analysis shows that counties with the highest population density have lost market share with respect to single-family construction. For this analysis, we define high-density areas to be counties in the top 10% with respect to population density. Approximately half of the total U.S. population lives in such counties.
These high-density counties previously constituted just under 40% of single-family construction in the first quarter of 2018 on a four-quarter moving average basis but since then the market share for these areas has fallen to 36% . This trend predates the COVID pandemic, as the market share for high-density counties had fallen from 39.7% in the first quarter of 2018 to 37.7% in first quarter of 2020, a 2-percentage point decline. During the pandemic, this market share fell to 35.4%, another 2.3 percentage point decline. Since the first quarter of 2022, single-family construction in high-density areas has remained at a constant market share, varying only a few percentage points.
Multifamily
In the multifamily sector, the HBGI year-over-year growth posted declines in the third quarter for all but one geography. The measure for small metro outlying counties was up 2.3% on a year-over-year four quarter moving average basis in the third quarter, as more than 9,000 permits were authorized in the third quarter, the highest reading for this geography type in the available data. Due to over 800,000 multifamily units currently under construction and higher interest rates, multifamily construction remains subdued from last year. Large metro suburban counties saw the largest decline in the third quarter of 19.3% year-over-year four quarter moving average basis.
High-density areas continue to make up a majority of the multifamily market. However, the market share has fallen from 67.4% in the first quarter of 2018 and to now 63.2%. This share fell significantly during the pandemic, dropping 3.8 percentage points over a two-year period. This is a notable shift for apartment construction to lower density areas.
The third quarter of 2024 HBGI data along with an interactive HBGI map can be found at http://nahb.org/hbgi.
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Private residential construction spending increased by 1.5% in October, according to the latest U.S. Census Construction Spending data. Year-over-year, the October report showed a 6.4% increase.
The monthly increase in total private construction spending was primarily driven by higher spending on residential improvements. Improvement spending surged by 2.7% in October and was 18.5% higher compared to the same period last year.
Spending on single-family construction inched up by 0.8% for the month. This marks a continuation of growth after a five-month decline from April to August, aligning with the rising builder confidence. Compared to a year ago, spending on single-family construction was 1.3% higher.
Meanwhile, multifamily construction spending ended its streak of ten consecutive monthly declines, edging up by 0.2% in October. Despite this slightly monthly gain, multifamily construction spending remained 6.8% lower compared to a year ago.
The NAHB construction spending index is shown in the graph below. The index illustrates how spending on single-family construction has slowed since early 2024 under the pressure of elevated interest rates. Multifamily construction spending growth has also slowed down after the peak in July 2023. Meanwhile, improvement spending has increased its pace since late 2023.
Spending on private nonresidential construction was up 3.5% over a year ago. The annual private nonresidential spending increase was mainly due to higher spending for the class of manufacturing ($32.9 billion), followed by the power category ($6.4 billion).
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According to NAHB analysis of quarterly Census data, the count of multifamily, for-rent housing starts declined during the third quarter of 2024. For the quarter, 94,000 multifamily residences started construction. Of this total, 88,000 were built-for-rent. This was almost 14% lower than the third quarter of 2023.
The market share of rental units of multifamily construction starts declined to below 94% for the third quarter, as the built-for-sale, multifamily condo market experienced a gain. The historical low market share of 47% for bult-for-rent multifamily construction was set during the third quarter of 2005, during the condo building boom. An average share of 80% was registered during the 1980-2002 period.
For the third quarter, there were 6,000 multifamily condo unit construction starts, up from 3,000 a year ago. While still a small market, this was the highest quarterly count since mid-2022.
An elevated rental share of multifamily construction is holding typical apartment size below levels seen during the pre-Great Recession period. According to third quarter 2024 data, the average square footage of multifamily construction starts ticked higher to 1,061 square feet. The median edged up to 1,013 square feet. These estimates are near multidecade lows.
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The missing middle construction sector includes development of medium-density housing, such as townhouses, duplexes and other small multifamily properties.
The multifamily segment of the missing middle (apartments in 2- to 4-unit properties) has generally disappointed since the Great Recession. However, there was a noticeable uptick for this type of housing construction in the most recent data. For the third quarter of 2024, there were 6,000 2- to 4-unit housing unit construction starts. This is double the pace of construction from a year prior.
As a share of all multifamily production, 2- to 4-unit development was just above 6% of total multifamily development for the third quarter. However this is still lower than recent historic trends. From 2000 to 2010, such home construction made up a little less than 11% of total multifamily construction. Construction of the missing middle has clearly lagged during the post-Great Recession period and will continue to do so without zoning reform focused on light-touch density. But recent data offer hope for additional housing supply for these kind of structures.
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Reflecting the sharp increase in net immigration of recent years, the number of new immigrants joining the construction industry rose substantially in 2022. According to the latest American Community Survey (ACS), the industry managed to attract close to 130,000 new workers coming from outside the U.S. to help with persistent labor shortages. For comparison, this inflow surpasses the combined number of new immigrants who joined the industry in the two years prior to the pandemic. Only during the housing boom of 2005-2006, was the industry absorbing a similar number of new foreign-born workers.
Native-born workers remain reluctant to join the industry, with their total count remaining below the record levels of the housing boom of the mid-2000s by over half a million. As a result, the share of immigrants in construction reached a new historic high of 25.5%. In construction trades, the share of immigrants remains even higher, with one in three craftsmen coming from outside the U.S. This is consistent with the earlier ACS data that regularly shows higher shares of immigrants in the construction trades.
In 2023, 11.9 million workers, including both self-employed and temporarily unemployed, comprised the construction workforce. Out of these, 8.9 million were native-born, and 3 million were foreign-born, the highest number of immigrant workers in construction ever recorded by the ACS.
The construction labor force, including both native- and foreign-born workers, exceeds the pre-pandemic levels but remains smaller than during the housing boom of the mid-2000s. As the chart above illustrates, it is the native-born workers that remain missing. Compared to the peak employment levels of 2006, construction is short 550,000 native-born workers and new immigrants only partially close the gap. Due to the data collection issues during the early pandemic lockdown stages, we do not have reliable estimates for 2020 and omit these in the chart above.
Typically, the annual flow of new immigrant workers into construction is highly responsive to the changing labor demand. The number of newly arrived immigrants in construction rises rapidly when housing starts are rising and declines precipitously when the housing industry is contracting. The response of immigration is normally quite rapid, occurring in the same year as a change in construction activity. Statistically, the link is captured by high correlation between the annual flow of new immigrants into construction and measures of new home construction, especially new single-family starts.
The latest data show that the substantial uptick in the number of new immigrants in 2022 does not reflect the changing volume of home building as new single-family starts declined during that time period.
Previously, the link between immigrant inflow and home building activity also disconnected in 2017 when NAHB’s estimates showed a surprising drop in the number of new immigrants in construction despite steady gains in housing starts. The connection was further severed by pandemic-triggered lockdowns and restrictions on travel and border crossings, drastically interrupting the flow of new immigrant workers. In 2021, however, the flow of immigrants into construction returned to typical levels driven by home building activity.
The overall rising trend and the noticeable uptick after the pandemic in the share of immigrants are consistent with but more pronounced in construction compared to broader U.S. economy. Excluding construction, where the reliance on foreign-born workers is greater, the share of immigrants in the U.S. labor force increased from just over 14% in 2004 to over 17% in 2023, the highest share recorded by the ACS.
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Budget can be a major cause of problems during a project, particularly when initial costs increase during the process.
Solution: “It’s best to ask clients for their budget, so you can work around that,” says Saimir Zejneli of The Home Refurbishment Co. He believes this is the best way to avoid wasting time or causing problems later on.
“It’s easy to get into a dispute with clients if the [finish work] is included in the quote, as clients are likely to choose more expensive products,” Zejneli adds.
He recommends setting a budget for just the roughing in. For example, a kitchen budget might include supply of the kitchen cabinets, electrical and plumbing, but the client would choose items such as appliances, faucets, sinks and tile.
“You can give clients the links of traders you have accounts with to get a discount, but when they’re able to decide on their own [finish] materials, they’re in control of their budget,” he says.