The Construction Beat: Lumber hoarding corrects market, housing demand cools and why construction crews struggle to draw young talent
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This week, we’ve got updates for you on the president’s $1 trillion infrastructure deal, potential overtime changes and the latest on America’s strained housing market.
Despite obstacles the last few weeks, President Joe Biden’s $1 trillion infrastructure deal cleared the Senate on a bipartisan vote Tuesday. The bill garnered votes from 19 Republican senators, passing 69-30, and now moves to the House for approval. Once approved by the House, the bill heads to President Biden’s desk where he will have ten days to sign.
Seemingly, it appears the infrastructure bill has cleared its largest obstacle and, in all likelihood, will be approved by both the House and President Biden. If that’s the case, builders can expect a sharp rise in available federal contracting jobs. Specifically, the infrastructure bill will trigger new projects across the country in roadways, interstates, bridges, airports and electric vehicle charging locations.
Labor Secretary Marty Walsh has confirmed the Department of Labor is revisiting the overtime threshold under the Fair Labor Standards Act for field executive, administrative and professional employees. The FLSA requires non-exempt employees be paid at least one and a half times their normal rate for any hour worked over 40 hours in a week. The current threshold sits at $35,568 per year, meaning an employee must earn that much annually to possibly be considered exempt from overtime wages. Whether a worker is exempt depends not only on their annual salary but also on their respective job duties.
While it’s difficult to determine the degree to which the DOL may raise the overtime threshold, Democrats requested the threshold be raised to more than $82,000 within the next five years.
Under the FLSA, the majority of construction workers are considered non-exempt and thus eligible for overtime wages. But other employees in a construction business, such as office managers, salespeople, accountants and other professionals, may be exempt. To be sure, builders should review the DOL’s overtime exemption fact sheet as well as speak with their attorney for best practices.
The latest statistics continue to signal a cooling housing market following a hot summer. According to Redfin, the median home sale price did not increase for the first time since the beginning of March – ending a five-month streak of record-setting home prices. Other statistics are beginning to plateau including the number of homes that accepted an offer within one week of hitting the market and the amount of time a home is listed on the market. As conditions improve, Redfin economists say buyers should expect more options and less competition.
But make no mistake: the American housing crisis continues.
Specifically, inventory is tight. The National Association of Realtors found there were 1.25 million unsold units available at the end of June – meaning there are more realtors than available homes in America. While there are multiple reasons for this, many point to rising prices as a key factor. For example, the cost of building a house has risen 6% from June 2020, likely due to supply chain disruptions and labor shortages fueled by the pandemic.
Even with median home sale prices cooling, some economists don’t expect such cooling to last, let alone lower overall prices in the housing market. With red-hot demand, too many buyers on the market may prevent builders from producing enough inventory for supply to meet demand. Despite housing inventory issues easing slightly, this isn’t enough to drive down the overall price of a home.
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