Construction Jobs on the Rise: What It Means for the Housing Market

The housing market in the U.S. has been struggling with a persistent challenge: the growing demand for homes outpacing the available housing supply. One of the key factors behind this housing shortage is the lack of available workers. A limited workforce not only delays housing projects but also drives up labor costs, making it more expensive for builders to deliver new homes at a pace that meets demand.

Nevertheless, construction jobs have risen at record levels, growing about three times faster than overall employment since the pre-pandemic period. There are currently about 16% more construction jobs than in March of 2020 and 5% more than the previous peak in 2006.    

This analysis explores construction job concentration and growth across 300 selected metropolitan areas nationwide. Our findings suggest that areas with higher construction job growth are likely to see an uptick in housing starts.

The Share of Construction Jobs in Metropolitan Areas

NAR determines the share of construction jobs by calculating the ratio of construction jobs to the total number of nonfarm jobs in each metropolitan area. Nationwide, construction jobs represent 5.3% of all jobs.

As of July 2024, 194 of the 300 selected metropolitan areas had a construction jobs share exceeding 5%, the highest proportion in any of the comparison years. Several areas had returned to their pre-pandemic level of construction jobs, while others didn’t keep up.

Midland, TX, had the highest concentration of construction jobs, with about 33.5% of the area’s nonfarm jobs being in the construction sector. Odessa, TX, followed closely, with 23.3%, and Greeley, CO, with 16.4%. However, none of these three top areas have yet returned to their pre-pandemic construction job-share levels. Midland’s July rate was 1.4 percentage points lower than its pre-pandemic rate and 0.8 percentage points lower than last year’s rate. Similar trends were observed in Odessa and Greeley. On the other hand, several other leading areas have significantly increased their share since 2019. These include Cape Coral-Fort Myers, FL, with 14.5%; St. George, UT, with 13.3%; Baton Rouge, LA, with 12.9%; and Naples-Marco Island, FL, with 12.8%.

In contrast, Ithaca, NY, had the lowest concentration of jobs in construction, equal to 1.9% this summer. Following Ithaca were Trenton-Princeton, NJ, with 2.1%, and Ann Arbor, MI, with 2.4% of the jobs in construction.

Nearly 70% of the selected areas had more construction jobs in July 2024 than in July 2019. Additionally, about 62% of the areas experienced an increase in the share of construction jobs compared to the previous year.

The Growth of Construction Jobs

Nationally, the average growth rate of construction jobs from 2007 to 2023 was 0.4%. Between 2007 and 2011, the growth rate was negative, reaching a low of -16.0% in 2009 during the Great Recession. The rate saw another significant decline during the pandemic, dropping from 2.8% in 2019 to -3.2% in 2020. However, the construction industry has since rebounded, reaching a growth rate of 3.3% in 2023, which is 0.5 percentage points higher than its pre-pandemic level.

In 2024, the local average growth rate for construction jobs was 2.9%, matching the pre-pandemic rate from 2019. About 70% of the analyzed areas outperformed this rate over the last year.

Between 2019 and 2024, Cleveland, TN, registered the highest growth rate at 60.0%, with Elizabethtown, KY, and Fayetteville, AR at 57.1% and 42.9%, respectively. Notably, two areas in Idaho came in the fifth and sixth places: Idaho Falls with 37.5% and Boise City with 37.2%. Punta Gorda and Cape Coral-Fort Myers also showed significant growth in Florida, ranking fourth at 39.5% and tenth at 35.4%, respectively.

Beaumont-Port Arthur, TX, and Chicago-Naperville-Elgin, IL-IN, experienced the lowest growth rates at 0.5%, followed by Midland, TX, with 0.7%, despite Midland having the highest share of construction jobs in 2024. Between July 2019 and July 2024, only 7.3% of the areas recorded no growth in construction jobs, with a growth rate of zero.

From before the pandemic until this summer, 17.3% of the observed areas experienced negative growth rates, indicating a loss of construction workers. The most significant losses were recorded in Lake Charles, LA, whose rate was -52.2%. Following Lake Charles were Johnstown, PA, with -37.9%, and Augusta-Richmond County, GA-SC, with -29.9%. Ithaca, NY, which also had the lowest concentration of construction jobs, saw a decline of 21.4% in its construction workforce since 2019.

Construction Jobs and Housing Starts

Over the years, construction jobs and housing starts have exhibited similar trends. During the Great Recession, housing starts plummeted from 1.3 million in 2007 to 900,000 in 2008, hitting a low of 554,000 by the end of 2009. Similarly, construction jobs fell from 7.2 million in 2008 to 6 million in 2009. Although housing starts began to recover immediately, construction jobs declined by 499,000 in 2010, only starting to increase in 2011.

During the pandemic, housing starts rose significantly in 2020 and 2021 due to the higher demand and favorable mortgage rates. Specifically, housing starts rose from 1.3 million in 2019 to 1.6 million in 2021. In contrast, construction jobs decreased from 7.5 million in 2019 to 7.4 million in 2021, impacted by economic lockdowns. However, construction jobs rose above the pre-pandemic levels in 2022, with the market resuming operations.

By 2024, construction jobs have increased to a record high of 8 million, surpassing pre-pandemic levels, while housing starts have also risen by 10 percentage points compared to 2019.

Nationally, historical data reveals a positive correlation between construction jobs and privately-owned housing starts. The NAR Research team’s model projects that increasing construction jobs and average weekly wages in the construction industry will boost housing production. Notably, increasing the number of construction jobs has a more significant impact on housing starts than wage increases. This suggests that all else being equal, metropolitan areas with strong job creation in the construction sector are also likely to see a rise in residential housing construction.