The homebuilding industry has been the hardest hit segment of the construction sector. Indeed, homebuilders saw their payrolls contract by a total of nearly 1.5 million from the peak back in April 2006 to their low point in October 2010. Furthermore, while the homebuilding industry accounts for just above one-third of construction sector payrolls, it accounted for nearly two-thirds of the sector’s job losses during this time period.

Unfortunately, the level of payrolls have barely budged since bottoming out in late 2010 as current employment in the industry sits at approximately 2.02 million—an increase of just 20,000 since October 2010 and still 41% below the peak. A recovery in housing starts will be the critical factor in bolstering employment for the homebuilding industry; however, virtually all of the growth in new home construction has occurred in the multifamily market segment as single-family builders continue to cope with the combined effects of a weak labor market, tight lending and numerous markets saturated with foreclosed homes and distressed sales. Until there is more considerable improvement in these supply and demand side drivers, we anticipate only modest gains in homebuilder payrolls over the near term.