How immigration crackdowns are tightening the construction labor market

In October, homebuilder confidence fell to its lowest level since June 2012, according to the newest National Association of Home Builders survey.

There are a few factors at play here. Mortgage rates are high, sitting at 7.4% according to Freddie Mac. Diesel and building materials are pricey right now, too. Plus, there are labor shortages: More than a third of builders reported immigration enforcement activity in their area, which caused delays because workers weren't reporting to job sites.

NAHB Chief Economist Robert Dietz visits different housing markets all over the country. Last week he was in Alaska; this week he’s going to Colorado. Lately, he said, builders have been expressing more worry about workers.

“We’ve seen in the data and I’ve heard from builders over the last month or two, an increasingly tightened labor market,” he said.

Dietz said raids by Immigration and Customs Enforcement have been a factor. Legal workers are staying home because they worry about being detained along with undocumented workers.

“Typically when the word gets out that immigration enforcement has taken a step up, it has a ripple effect in the market in the coming weeks,” he said.

About a third of workers in the trades are foreign born, said Riordan Frost, a senior research analyst at the Joint Center for Housing Studies at Harvard.

“That share has been growing quite a bit as immigrants have actually been accounting for all of the net growth in the trades workforce since its kind of post-Recession trough in 2013,” he said.

These workers are especially essential in the South, where home building is busiest. Frost said they’re concentrated in lower wage trades like drywall, roofing and construction, where pay is at least $15,000 less than jobs in electrical and plumbing.

“So you see this clear alignment between the foreign-born share and the median income,” he said.

Higher pay could help bring more workers in general into these jobs. But it’s not a quick fix.

“It took us years to get into this skilled labor shortage. It’s gonna take us years to get out,” said Dietz at NAHB.

Without immigrant workers, the industry needs time to recruit and train.