East Hawaii News

DBEDT: Construction Leading Recession Recovery

February 20, 2014, 11:43 AM HST
* Updated February 20, 12:34 PM
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Construction of new homes in Hawaii is lagging behind population growth but is gaining ground, a report issued by the state Department of Business, Economic Development and Tourism shows.

The report on the construction industry, the first comprehensive study of its kind since 2000, highlights the role that sector plays in the state’s economy.

The study said construction is expected to be one of the main engines for economic growth this year and next, as the economy continues to recover from the Great Recession that peaked in 2008.

Driving much of that is the current housing shortage.

It noted that Hawaii’s population is currently growing at about 1% per year, which translates to about 14,000 new residents.


With an average household size of 2.9 persons, and a vacancy rate of 12.4%, Hawaii’s current housing need is about 5,500 new units per year, the study said.


However, the average number of permitted units has averaged about 3,400 units over each of the past five years.

The downturn in housing starts began in 2005, with nearly three-quarters of residential construction disappearing nationwide by 2009.

The study said Hawaii generally followed that trend after peaking in 2005 with 9,706 units. However, while home construction lagged behind other industries in recovery from the recession, it has rebounded of late, with a strong increase of 9.4% in 2013, with 3,561 housing units authorized.

New housing units in the US and Hawaii. DBEDT graph.

New housing units in the US and Hawaii (click to enlarge). DBEDT graph.


According to the report from DBEDT’s Research and Economic Analysis Division, the construction industry added 2,500 jobs in 2013, the largest among all Hawaii industries. It is expected to add about the same number this year.

The number of building permits issued grew 3% in 2013 over the previous year, while their value jumped 22.4% over 2012.

Three of the state’s four counties last year saw increases in permit values led by Kauai at 8%, Honolulu with 5.5% and Hawaii County with a 3.8% increase. Maui County’s permit values decreased 11.4% in 2013.

Construction is the state’s fourth largest private industry as measured by the share of Hawaii’s gross domestic product, following tourism, real estate and health care.

In 2013, the construction industry completed an estimated $7.7 billion of projects and contributed 32,000 payroll jobs to the economy.

The full report is available here.

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