Homebuilder Wage Growth Slows

Residential Building Wages Ease as Housing Activity Cools

Wage growth for residential building workers slowed significantly in 2025, reflecting softer housing demand and reduced construction activity nationwide. New data from the U.S. Bureau of Labor Statistics (BLS) show both nominal and inflation-adjusted wage gains remained modest during the fourth quarter, underscoring a broader shift from the rapid post-pandemic expansion to a more measured growth environment.

In nominal terms, average hourly earnings (AHE) for residential building workers climbed to $39.63 in December 2025 — a 3.3% increase from $38.37 one year earlier. While that represents a slight pickup from November’s 2.0% year-over-year gain, it marks a substantial slowdown compared to the 9.4% peak recorded in June 2024.

The deceleration aligns with ongoing headwinds facing the housing sector. Elevated mortgage rates, affordability pressures, and persistently high material costs have constrained homebuilding activity over the past year. As construction projects slowed or were delayed, labor demand eased. At the same time, the number of open and unfilled construction jobs continued trending downward, consistent with cooling momentum across the residential market.

Wage Gains Remain Competitive Across Industries

Despite slower growth, residential construction wages continue to outperform several major sectors of the economy, highlighting the skilled nature of the workforce and the structural need for housing supply.

Residential building workers now earn:

• 9.9% more than workers in manufacturing ($36.07 per hour)
• 23.3% more than employees in transportation and warehousing ($32.14 per hour)
• 2.6% less than workers in mining and logging ($40.69 per hour)

These comparisons show that while wage growth has moderated, pay levels remain elevated relative to many blue-collar industries. This reflects years of labor shortages, demographic shifts in the construction workforce, and ongoing demand for skilled trades.

Shifting From Rapid Expansion to Stable Growth

The moderation in wage growth signals a normalization phase for residential construction following the intense hiring and compensation increases seen during the pandemic-era housing boom. Builders previously faced acute labor shortages, bidding up wages to secure talent amid record housing demand and supply chain disruptions.

Now, as affordability constraints limit new housing starts and buyer traffic softens, employers are operating with more caution. Hiring has become more selective, overtime hours have stabilized, and wage pressures have cooled.

However, economists caution that structural labor shortages have not disappeared. An aging workforce and limited pipeline of younger skilled workers continue to pose long-term challenges. If housing demand rebounds — particularly if mortgage rates ease — wage pressures could reaccelerate.

What the Data Covers

The wage figures reflect all employees in the residential building industry. This includes workers involved in new single-family housing construction (excluding for-sale builders) and residential remodeling. Specialty trade contractors are not included in this dataset.

The fourth-quarter data offer an important snapshot of how the housing labor market is adjusting to changing economic conditions. While growth has slowed, wages remain historically strong — suggesting the sector is cooling, but not contracting sharply.

Looking ahead, much will depend on interest rate trends, inflation stability, and buyer confidence. For now, residential building wages appear to be entering a steadier, more sustainable phase after years of volatility.

Originally reported by Jing Fu in Eye On Housing.