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State construction industry sheds jobs despite housing recovery

August 16, 2013|By Andrew Khouri
  • The California construction industry lost 7,300 jobs in July, the largest decline of any industry, the state's Employment Development Department said Friday.
The California construction industry lost 7,300 jobs in July, the largest… (Damian Dovarganes / Associated…)

California shed thousands of construction jobs last month, another sign that the resurgent housing market has so far failed to translate into widespread building.

The construction industry lost 7,300 jobs in July, the largest decline of any industry, the state’s Employment Development Department said Friday. 

The housing market has rebounded sharply this year as tight inventory, low mortgage rates and an improving economy have sent prices sharply higher. Builders are increasingly confident in the new home market, but new construction, while increasing, has so far failed to keep up with demand and remains below normal levels.

Builders have expressed several concerns, including tough access to credit, the lack of buildable lots and a shortage of qualified workers. Construction plummeted to historic lows after the bubble popped, and many builders were caught off-guard by the speed of the recovery.

While construction jobs fell statewide last month, economists have said that construction is volatile and not too much importance should be placed on each month’s fluctuations in jobs.

“Construction spending is going to get better based on the number of permits being drawn over the past 12 months,” said Esmael Adibi, an economist at Chapman University. “Those don’t immediately become construction, but it will.”

In California, 5.23% more units were permitted in June, according to the latest data from the California Homebuilding Foundation. New permitted units were up 26.47% from last June.

Nationwide, housing starts rose nearly 6% in July from a month earlier, the Commerce Department said Friday. The increase came entirely on the back of multifamily projects, as single-family home starts declined. Starts also remained below normal levels.

“Builders are undersupplying the market, so inventories are likely to get leaner in the months ahead, and price growth is likely to accelerate,” IHS Global Insight economists Patrick Newport and Stephanie Karol wrote in a emailed analysis.

That should spur more builders into action, they wrote.

ALSO:

Housing starts increase nearly 6% in July

Mortgage rates level off, Freddie Mac says

Builder confidence on an upswing, but construction lags

Times Staff Writer Shan Li contributed to this report.

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