The construction labor shortage is a big hurdle for the real estate industry


Right now, real estate developers are facing one of their biggest challenges: a construction labor shortage. Understanding the severity of this shortage can help you plan a successful development strategy.

This guide covers why there’s a construction labor shortage. Next, we cover how this shortage specifically affects the real estate market. Finally, we go over a few changes the construction industry can implement to help resolve the labor shortage faster.

This post covers:


Why is there a labor shortage in the construction industry?

A labor shortage in construction occurs when demand for construction work outnumbers the construction workers. It usually occurs if too many construction workers leave for other industries. Additionally, rising costs due to inflation can leave construction companies unable to afford to hire more workers.

Typically, there is a construction worker shortage during the hyper supply phase of the real estate cycle. The hyper supply phase occurs when the real estate market is booming with a surplus of properties that need to be constructed and renovated. As a result, there are more contracts available than there are workers.


What is the demand for construction workers?

According to the U.S. Bureau of Labor Statistics, there are over 167,800 openings in the construction industry each year. What’s more, the industry is expected to grow by at least 7% over the next decade.


Does the US need more construction workers?

Currently, construction labor shortage statistics indicate that the US will need nearly 650,000 more workers to meet rising demand. However, the construction labor shortage varies by state and is expected to be worse in densely populated regions.


The construction labor shortage, among other reasons, is a result of workers leaving for better paying industries.


How does the construction labor shortage affect the real estate market?

Virtually everything about the construction labor shortage negatively affects the real estate market. In fact, even the best real estate investment strategy can be outright shut down and even ruined by construction worker shortages.

The construction labor shortage:

  • Prolongs the time it takes to renovate and construct new properties.
  • Increases overall construction costs for a property.
  • Can bring on a housing recession faster, as rising costs mean fewer people can afford homes.

The construction labor shortage can kickstart a nasty chain of events. As a matter of fact, a construction worker shortage can collapse the entire real estate market if it becomes too severe.

So — what’s the solution?


How to fix the construction labor shortage

Unfortunately, there’s little real estate developers can do to work around the construction labor shortage. But, the skilled labor shortage affects all aspects of the real estate industry. So, there are ways that the shortage can be fixed or severely lessened. However, to do so, the construction industry will have to radically change and adopt new strategies.

Additionally, to ensure wise investments, it’s important to know how construction companies will change when (or if) they resolve the construction labor shortage. After all, some of the following changes may affect real estate investment strategies.

Methods to fix the housing labor shortage include:

  1. Increasing salary & benefits
  2. Recruiting women
  3. Adopting new technology
  4. Modernizing recruitment strategies


1. Increasing salary & benefits

The average annual salary of US construction workers is $37,520. A pay raise is one of the most important steps toward reducing the construction labor shortage.

Benefits, healthcare, and retirement plans are another way to make the industry more appealing to workers. In addition to monetary value, construction companies can outline the unique opportunities they offer employees by providing specialized training. Showing prospective employees the rewards of a career in construction can encourage them towards a long-term commitment to both your specific company and the industry as a whole.


Recruiting women can easily fix the construction labor shortage


2. Recruiting women

A shocking statistic reveals that less than 5% of construction workers are women. Considering that 50% of the US population is female, this is extremely low. In fact, if there were even half as many women as there are men in the construction industry, there wouldn’t be a labor shortage.

So, by tailoring recruitment efforts to appeal to women, the construction industry can quickly overcome the employment crisis.

To do this, construction companies have to eliminate the stereotypes of what men and women are capable of. Specifically, recruitment campaigns must dispel gender-based myths that assert “men are stronger than women.”

Internally, companies must be vigilant in the face of toxic and sexist workplace culture that’s hostile toward female employees.


Learn about the 4 stages of the real estate cycle:


3. Adopting new technology

Advanced technology can automate many tasks in the construction industry, cutting down on the anticipated increased labor demands. Manufacturing technology can cut down on production costs and create construction materials that are easier — and faster — to assemble.

Adopting new technology may also bring in workers from other industries who wouldn’t have previously had a role in the construction industry.

New technology can include:

  • Modular building systems
  • 3D printing technology
  • Autonomous robots
  • Drones
  • Construction accounting software
  • Productivity tracking software


4. Modernizing recruitment strategies

Most hiring in the construction industry occurs through word-of-mouth. By posting in online job forums and on social media, recruits — including many younger workers — are found more efficiently.

Construction companies can also offer internship and mentorship programs to younger workers, thus generating interest and opportunities within the industry. Furthermore, this doesn’t have to cost companies anything! If programs treat participants fairly in terms of education and labor, internships will pay for themselves.



  • The construction labor shortage has two primary causes: too much demand for construction and not enough workers and poor working conditions or benefits.
  • The construction labor shortage negatively affects the real estate market. It increases the time it takes to develop properties, raising development costs, pricing out potential buyers, and leading to a recession.
  • Real estate developers can learn effective new strategies by staying aware of how the construction industry will need to change to fill the labor shortages.
  • Methods to fix the construction worker shortage include increasing salary and benefits, recruiting women, adopting new technology, and modernizing recruitment strategies.


ensure your proptech investment pays off

Profile image for Nick Manzolillo


Nick Manzolillo

I'm a Rhode Island-based writer fascinated with real estate development, the inner workings of the real estate industry, and how real estate and technology blend together.

Follow Nick on LinkedIn