Back to 1920?

What was happening to the building boom? By last week there were plenty of signs that in many cities it was turning into something resembling a bust. Although the construction industry has figured that there will be enough materials for a million new houses in 1947, the Department of Commerce now estimates that only 700,000 to 800,000 will be built. And this seemed highly optimistic. Fewer permanent new houses (133,500) were started in the first three months of 1947 than in the same period last year.

The trouble was building costs. They had soared so high that they had scared away prospective builders. Even speculative builders were getting jittery. In the suburbs of many cities stood rows of tidy new overpriced houses, from $9,000 up, empty: 2,000 were waiting for buyers in Chicago; 150 were vacant along the Worcester turnpike outside Boston. One Boston builder has 50 bright new houses which no veteran, or anyone else, turned up to buy in the 60-day period following completion. In Denver, real-estate salesmen are quitting to sell washing machines and autos.

On Long Island (where new construction is only 20% of last year's) builders who begrudge paying commissions are willy-nilly turning their houses over to brokers. Houses are still selling fast in parts of the South and in Los Angeles (average price: $12,620). But in Dallas the News one day last week carried almost 18 columns of classified ads of houses for sale. Builders were still trying to sell houses, not rent them, though the housing situation was still as bad as ever. In San Francisco, Advertising Executive Kay Daly, 26, used a billboard to help her find an apartment. Result: 93 phone calls (35 from other apartment seekers) but no apartment.

Trouble No. 1. Detroit Builder George Miller knows why houses aren't selling: a house he could build in 1940 for $5,090 costs $9,990 today. The NHA index of building costs for a standard house stood at 137.4 (1935-39 average = 100) on V-J day (see chart). In the next 18 months it jumped as much as it had in the previous six years. But the real shocker was the way costs had skyrocketed in the last six months.

The price of materials was half the trouble. Since 1939, prices of all building materials are up more than 86%. But some important ones are up much more; lumber is up 200%. However, there are signs that prices are leveling off; and some are beginning to slump.

Trouble No. 2. The second half of the trouble was labor productivity--and labor costs. Complained a Dallas builder: "Sometimes we think it takes two men now to do as much as one did in 1939." Masons who used to lay 700 to 800 bricks daily are down to 300 to 500. Because they get time-and-a-half or double-time for Saturday and Sunday work, some Chicago building-trades workers like to knock off for two days in midweek and work on weekends. And wages, at an alltime high, are still going up. In Detroit, for example, where carpenters average 110% above prewar--$102.20 weekly with overtime--they are demanding a 42 1/2-an-hour increase.

Few apprentices were trained in the '305, so most journeymen now are older men who simply cannot do a hard day's work. (The average age of masons in Chicago is 58.) Builders agree that the productivity of most A.F.L. building-trades labor is only 50 to 60% of prewar. And there seemed to be little hope of much improvement.

There was no doubt that housing, and commercial building as well, was pricing itself out of the market. The Department of Commerce cut its estimates of total U.S. building this year from $21.6 billion to between $18 and $19.6 billion. What happens next? After World War I, construction costs also got out of hand until in 1920 the boom collapsed. Then costs dropped substantially--and the boom started again.

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