Washington Suffers Nation’s Largest Construction Job Decline as Housing Costs Surge

Washington state is facing mounting challenges in its construction industry, recording the steepest year-over-year job losses in the nation. Between June 2024 and June 2025, the state lost approximately 11,300 construction jobs, according to new data released by the Associated General Contractors of America (AGC).

“There’s no question that developers have pulled back,” said AGC Chief Economist Ken Simonson. “Additionally, banks have tightened their lending practices, making it more challenging for developers to secure financing.”

The contraction is most pronounced in the Seattle-Tacoma-Bellevue region, which accounted for nearly one-third of the statewide job losses. The decline comes at a time when the broader economic environment is being reshaped by high interest rates, cautious lending, and shifts in work patterns.

Seattle’s office vacancy rate has now soared to almost 30%, largely due to the persistence of remote and hybrid work models. The dwindling need for physical office spaces has pushed down valuations, reduced development incentives, and contributed to broader construction slowdowns.

Despite the slowdown in construction employment, the residential real estate market continues to heat up. Seattle’s median home price has reached a staggering $750,000, positioning the city fourth nationwide in home sale prices—just behind San Francisco, Los Angeles, and San Diego, according to a report by Remax National Housing. This figure includes homes across King, Pierce, and Snohomish Counties.

The soaring home prices, set against dwindling construction activity, have raised concerns about long-term housing affordability and economic resilience. Industry observers warn that without a rebound in construction starts, the housing supply will continue to lag far behind demand, pushing prices further out of reach for many buyers.

Still, there are signs of potential recovery. Large-scale infrastructure projects remain in the pipeline, offering a possible path forward for job creation. These include the $5 billion Microsoft campus renovation in Redmond, the East Link light rail extension expected to connect Bellevue to Seattle, and the continued development of the Spring District—an ambitious urban center with transit-oriented planning.

Even so, industry experts remain cautious. The confluence of tighter credit, high land and materials costs, and regional zoning challenges continues to hinder development. The AGC is urging policymakers to focus on pro-construction policies, such as streamlined permitting and incentivizing housing development, to help stabilize the market and stimulate job growth.

With Washington’s economy closely tied to real estate and tech development, how it addresses this construction job crisis may shape the region’s growth trajectory for years to come.

Originally reported by The Seattle Medium.