While D.J. Hughes hunts for carpenters to join his team at a Phoenix-area house-framing company, competitors are tracking down his workers at building sites and offering them more money.
"Everybody is trying to pull crews from everyone," said Hughes, 43, a project manager for J.L. Baugh Construction in Gold Canyon, who admits to a couple attempts at poaching framers from rival contractors. "I've been doing this for a quarter of a century, and this is the biggest shortage of skilled laborers I have ever seen."
After being decimated by the housing crash, Arizona's builders are now scrounging for workers as demand for new homes climbs. Building permits are at an almost three-year high, creating a scarcity of framers, roofers and masons, many of whom moved elsewhere when work dried up. Laws aimed at curbing illegal immigration only added to the shortage by pushing experienced laborers out of the state.
Construction jobs, which also include commercial and government projects, increased 9.3 percent in May from a year earlier to 120,300, the biggest gain of any industry in the state, according to Arizona's Office of Employment and Population Statistics. Nationally, industry employment rose 0.4 percent.
The average hourly wage for construction workers in Arizona increased to $20.72 from $19.53 a year earlier, the state agency says.
Arizona was among the areas hit hardest by the housing crash. Home prices in April were down about 47 percent from the peak in 2006, more than the 31 percent decline nationally, data from CoreLogic Inc. show. The state ranked second in the rate of foreclosure filings last month, according to RealtyTrac Inc. Building jobs have declined by more than half since 2006.
"The industry is so wound down that it's hard to flip the switch on and build as many homes as there is demand right now," said Ben Sage, director of the Arizona region for Metrostudy, a Houston-based firm that tracks new construction. "The subcontractors are scrambling for workers."
New-home demand in Phoenix is climbing as cash-wielding investors elbow out traditional buyers for a dwindling supply of existing properties. The inventory of previously owned houses for sale in Phoenix dropped 54 percent in April from a year earlier, according to a report by Michael Orr, director of the Center for Real Estate Theory and Practice at Arizona State University's W.P. Carey School of Business. That helped push the median price for single-family homes up 25 percent to $140,000.
Purchases of new houses surged 43 percent in April from a year earlier, according to the report. The median price for new homes rose 4.6 percent to $207,000.
Reed Porter, chief executive officer of Trend Homes in Gilbert, said he expects his company to build 200 houses this year, twice as many as in 2011.
"So far, we're keeping up with demand," he said. "If demand continues to increase, clearly we'd need more skilled workers."
While widespread worker shortages are unlikely as the U.S. unemployment rate sits above 8 percent, some local markets may find themselves in situations similar to Arizona's biggest city, according to David Crowe, chief economist for the National Association of Home Builders. Building permits nationally climbed to the highest level since September 2008 in May, the Commerce Department said last week.
"Phoenix may be an extreme case," Crowe said. "We may see this more frequently in other markets as housing recoveries occur where labor supply is diminished."
Shares of U.S. homebuilders have gained 35 percent this year as earnings improved and orders increased. Homebuilder confidence climbed in June to a five-year high, the National Association of Home Builders/Wells Fargo index showed last week.
In Arizona, single-family home building permits rose 63 percent in April from a year earlier to 1,575, the highest since July 2009, according to data from the U.S. Census Bureau.
Some builders have shuttered sales offices in less desirable areas and are concentrating on the most productive communities because of the shortage of workers, said Orr of ASU.
Companies in the region "are waiting for contracting firms to hire more people before they take more orders," he said. "The lack of skilled labor is holding back the production of new homes."
Downtimes of a few days at construction sites are becoming more common as builders wait for crews to finish other jobs before starting work, according to Porter of Trend Homes.
The average time to complete a house in the area is four months, twice as long as it took in February, said Jim Belfiore, president of market researcher Belfiore Real Estate Consulting in Phoenix.
"A lot of builders were caught on their heels," Belfiore said. "They were caught by surprise with how rapidly the demand situation turned around."
Glenn Gittus, who started a framing company in May, four years after he sold his previous one, said experienced laborers are hard to find because few locals are entering the trades.
Workers who moved into the foreclosure rehabilitation business are returning to new construction because wages have jumped about 20 percent during the past couple of months, said Gittus, a former senior vice president in charge of construction for Scottsdale-based Meritage Homes Corp.
"It's a knife fight out there trying to get crews," Gittus said. "You better hope you have a good relationship with your crew foremen and treated them right in the past, because that's why my guys are knocking on the door."
Gittus, who wants to add about 30 framers to his 20-person team, said he's being careful not to hire too many employees because the Phoenix area's "mini boom" is likely to last only a year or two until investors renting out properties dump them onto the market. His previous firm had about 350 framers.
The Home Builders Association of Central Arizona is helping to address the shortage by developing construction programs with a local vocational-technical school, said Connie Wilhelm, the group's president. While the next wave of flooring, painting, stucco and drywall workers can be taught quickly, framers, plumbers and electricians will take longer, she said.
"What we are trying to do is solve a long-term problem because we are in a desirable market," Wilhelm said.
Training takes time. Hughes, the Gold Canyon project manager, needs crews that are ready to go.
He called three former foremen last month who returned to Mexico four years ago when local construction jobs slowed. He persuaded one of them to come back. The others, who also have proper documentation, are hesitant because they don't like Arizona's immigration laws and are worried the market will fizzle out, he said.
Hughes also wonders how long the demand for workers will last.
"It's busy," Hughes said. "But everybody still has their hands behind their back, crossing their fingers that this continues."
"The industry is so wound down that it's hard to flip the switch on and build as many homes as there is demand right now. The subcontractors are scrambling for workers."
Ben Sage, director of the Arizona region for Metrostudy, a Houston-based firm that tracks new construction.