Inflation Reaccelerates as Cost Pressures Build
A multidimensional supply shock is weakening the U.S. economy, fueled by the delayed effects of the 2025 trade wars and tariffs, elevated oil prices, and persistent policy uncertainty. These dynamics are now spilling over into the demand-side of the economy, as consumer confidence decreased significantly in April because of the Iran war and rising uncertainty.
Inflation jumped in March, with the Consumer Price Index (CPI) increasing from 2.4% to 3.3% on a year-over-year growth rate basis. This was the highest rate of consumer inflation in almost two years. Nearly three-quarters of the March increase was due to higher gas prices. In fact, overall energy prices were up almost 11%.
There was a sliver of good news in the CPI data, as core inflation (minus food and energy) was up only 2.6% year over year. However, producer prices are rising as well, with the PPI up 4% year-over-year in March, signaling higher business costs ahead. With inflation higher, the probability of a Federal Reserve rate cut at any point in 2026 has been significantly reduced. Treasury Secretary Scott Bessent noted that the Fed may have to wait for additional clarity before making future policy changes.
Further, as a result of these headline macro headwinds, economic growth will be lower in 2026 than in 2025, and inflation and unemployment will be higher. Long-term interest rates remain elevated, with mortgage rates just below 6.4%. NAHB is forecasting less than 2% GDP growth for 2026 and recession risk in the coming year has increased to 40%, perhaps higher if the already tenuous cease fire with Iran does not hold.
The March labor market data was positive, with 178,000 jobs created after 133,000 job losses in February. Nonetheless, the overall pace of job creation has slowed, with just an average of 68,000 jobs created per month over the first quarter of 2026. The number of open construction jobs remains relatively low, just 202,000 in February as the low-hire, low-fire labor market affects most industrial sectors.
With macro conditions weakened and uncertainty elevated, housing demand will decline in 2026. The housing market needs greater certainty and a reduction of headline risk to regain momentum.
-NAHB
PRESIDENT'S MESSAGE
Highlights from the TAB Spring Meetings
by Lydia Mlouhi
Earlier this month, our Vice President, Edgar Garcia, along with my husband and President of Crown Heritage Homes, and I had the opportunity to attend the Texas Association of Builders (TAB) Spring Meetings in Bastrop, Texas. The meetings were held over three days and provided valuable insight into the issues shaping our industry, along with meaningful opportunities to collaborate with fellow builders from across the state.
Here are some key highlights:
• Codes & Standards: TAB is in the process of gathering industry input related to the State Energy Conservation Office’s upcoming adoption of the 2024 Energy Code. A dedicated group has been formed to help organize and present these recommendations, and there are opportunities for members to get involved by serving on advisory boards.
• Contracts: Discussions are underway to improve how contract documents are delivered and utilized, with a focus on making them more efficient and user-friendly for members.
• Membership: TAB membership is approaching 10,000 members, with a solid retention rate of 71%. The committee is actively planning upcoming membership initiatives to continue building momentum into 2026.
• Workforce Development: A major highlight was the passage of Proposition 1 last November, which provides funding for the Texas State Technical College System. This represents a significant step forward in strengthening the pipeline of skilled labor for our industry.
• Local Presidents & Vice Presidents Council: Leadership from across the state shared ideas and strategies focused on supporting members and growing local associations.
• Professional Women in Building (PWB) Council: Updates were provided on fundraising efforts that support programs aimed at increasing opportunities and involvement for women in the building industry.
• Volume Builders Council: Ongoing discussions centered around regulatory and development-related issues, including special districts, impact fee considerations, and county-level regulations.
• Texas Builders Foundation: The Foundation continues its efforts to give back through both disaster relief—supporting those affected by the July 4th floods in Central Texas—and scholarship programs for students pursuing careers in the industry.
For more detailed information, I encourage you to visit the TAB website at texasbuilders.org and explore the Resources section, where meeting agendas and additional materials are available.
TAB meetings offer a valuable opportunity to learn, connect, and engage with both experienced and emerging leaders across Texas. They provide insight into the work being done behind the scenes to advocate for our industry and reinforce the importance of staying involved. More importantly, they highlight that our collective strength comes from participation and collaboration.
The next TAB meetings will be held July 21–24 in San Antonio, in conjunction with the Sunbelt Builders Show. All TAB meetings and the Sunbelt Show are open to all TAB members—and as EPAB members, you are all TAB members. I strongly encourage you to attend. You will gain valuable insight, build meaningful connections, and walk away with a better understanding of where our industry is headed.
EXECUTIVE MESSAGE
An update on Executive Vice President, Ray Adauto
With a grateful and humble heart, I want to extend my deepest thanks to the El Paso Association of Builders for the incredible support you have shown my family over the past several weeks. As many of you know, my father, Ray, underwent a scheduled valve replacement on April 6. While the procedure itself was successful, complications followed, including a leak in his mitral valve and serious breathing issues that required his return to the ICU.
During that time, he faced multiple cardiac episodes, was intubated, and required the placement of an Impella device to assist his heart while it recovered. It has been an incredibly difficult journey, but one made more bearable because of the overwhelming outpouring of support from this community.
The prayers, visits, messages, and constant encouragement have meant more than words can fully express. On behalf of my mother, my sister, and our entire family, thank you for standing beside us and lifting my father up during his most critical moments.
We are hopeful as he continues to make progress.
He is now extubated and breathing on his own which is an incredible milestone. While he is not yet speaking, we are confident that with therapy, his voice will return soon. His strength and determination have inspired everyone around him.
Please continue to keep him and our family in your prayers. Your kindness continues to instill in us just how special this community truly is.
With sincere gratitude,
Associates Vice President
Housing’s ‘Silver Tsunami’ Is Coming
The so-called “silver tsunami” describes the wave of millions of homes expected to hit the market as older Americans increasingly decide to sell their properties. However, industry experts are noting that this “tsunami” isn’t landing where it’s needed most.
Adults aged 65 and older now account for nearly one in five Americans and own about one-third of all U.S. homes, representing an enormous share of the nation’s housing wealth.
Some believe this cohort of home owners will eventually create a surge in housing supply. However, where these homes are located will play a significant role in determining whether this shift eases affordability or creates new imbalances.
Retirement-friendly regions, especially in warmer climates, have some of the highest concentrations of older home owners. But these same areas often continue to attract retirees, which helps sustain demand even as more homes eventually come onto the market.
Meanwhile, in the Midwest and Rust Belt regions, the shares of 65+ households are larger and the homes are generally more affordable. However, metros such as Pittsburgh, Buffalo, and Rochester are at risk of oversupply because population growth has been slow or even negative.
By contrast, metros with strong headship rates and smaller shares of 65+ households are better positioned to absorb the additional supply from the housing turnover. Some of these metros include Durham-Chapel Hill, N.C., Knoxville, Tenn., and Jacksonville, Fla.
Some markets like Charlotte, Denver, and Austin can especially benefit from additional supply, as strong population growth and small shares of 65+ households could place them at risk of becoming more constrained over time.
However, even where supply does increase, it may not match what younger buyers want. For example, homes owned by older Americans are often decades old and may require significant updates. This limits their appeal for younger buyers seeking modern layouts or energy-efficient features, blunting the impact of any supply increase.
Then there’s the question of timing, as many older home owners are not in a rush to sell. A large share own their homes outright, insulating them from rising interest rates and reducing financial pressure to move. At the same time, the high cost of assisted living and nursing care is encouraging more people to stay put and invest in “aging in place” renovations rather than relocate.
This demographic turnover will almost certainly add to housing supply. But it won’t be a silver bullet for affordability. In many markets, new construction and zoning reform will still play a far larger role in determining whether housing becomes more accessible.
Shrinking Share of Tradesmen in Construction
The American construction labor force is continuing its momentum away from construction trades and towards management, business and technical roles, according to NAHB’s analysis of the latest 2024 data from the American Community Survey (ACS). The share of construction trades workers declined from 71% in 2005 to less than 59% in 2024 while the share of computer, engineering and science occupations has more than doubled, and management and business roles have expanded by 73%.
How many people work in the construction labor force?
In 2024, there were 12.1 million construction labor force workers. Construction trades, including carpenters, electricians, painters, plumbers and first-line supervisors, accounted for 7.1 million workers or 58.8% of the total. There were 8.5 million of these trades workers at the peak of 2006, which explains the persistent labor shortages in the field today.
Have the number of whitecollar working jobs increased?
Yes, management ranks grew from 1.2 million to two million workers over the same time period, increasing its share from 10 to 17%. The number of engineers, architects and science-related occupations more than doubled. However, white-collar jobs are less common in construction than in the broader U.S. economy.
Why are there fewer tradesmen and more whitecollar jobs in the construction force?
The expansion of management and business roles may reflect increasing regulatory complexity, permitting requirements and compliance costs. These influences can lengthen project timelines and raise overhead without directly increasing output.
