New homes sales flourishing; contractors needed

Posted at 5:57 PM, Feb 29, 2016
and last updated 2016-02-29 19:58:11-05

New home sales in the greater Phoenix area sizzled in the month of December, according a recent report released by the Arizona State University W.P. Carey School of Business.

Home closings were up 45 percent from November and a whopping 58 percent higher than December of 2014-- that's the largest monthly total since October of 2008.

Construction companies must be in their glory, right? Not exactly.

"Right now it feels like there are 10 jobs for every contractor available to do those jobs," said Nick McCully, co-owner of Strong Tower Homes and Construction, which is based in Scottsdale.

McCully said it concerns him.  He said he expects new home builds to only be ramping up through 2017 and hitting a stride after that. Right now, he said, there just isn't the manpower.

"I attribute it to a number of things, some going back to 2005 when Hurricane Katrina hit.  A lot of skilled guys figured out they could get paid double or triple by going south and helping New Orleans reestablish," McCully said. "The construction industry seems like it went away. We were pulling tens of thousands of new home permits at one point. At the peak of the market, our economy was based off one-third of construction jobs. Then, when there is no construction, those people go to Idaho, Montana and the Dakotas. They get paid well with the oil boom and the shale boom up there. They just don't come back."

The shortage of workers means prices will likely continue to rise. McCully said most of their subcontractors have recently raised their prices across the board 10 to 30 percent.

"They have to pay their guys more to stay or pay significantly more to get talent in, which ultimately means prices are going to increase because pay for each thing within that food chain increases.  Those (increases) go to the homeowners," he said.

According to the ASU report, the worker shortage is likely to stunt production growth.

"With limited affordable land and shortages of skilled labor, we expect builders to concentrate their efforts on the most profitable sectors. This will mean the lack of supply at the low end is likely to remain for some considerable time, while supply in the mid-range and high-end will be adequate," wrote Michael Orr, author of the ASU report.

The report showed Peoria had the most new home closings in December, with 196.  Mesa was close behind, with 183, and Gilbert was third, with 174. 

Click on the map to see how many homes sold in your city in December.