The U.S. labor market showed renewed strength in October 2026, with nonfarm payroll employment increasing by 165,000 jobs and the unemployment rate declining to 4.1%, according to the latest data from the Bureau of Labor Statistics (BLS). However, the broader employment recovery contrasted with continued weakness in residential construction, which recorded its largest monthly job loss since March 2021.
Residential construction employment fell by 16,400 jobs in October, contributing to an overall decline of 3,000 jobs across the construction sector. While nonresidential construction added approximately 13,300 positions, those gains were insufficient to offset losses in homebuilding and residential contracting.
The residential construction sector employed approximately 3.3 million workers in October, including 921,000 builders and remodelers and roughly 2.3 million residential specialty trade contractors. Over the past 12 months, the sector has shed approximately 40,200 jobs, marking its 20th consecutive month of year-over-year employment declines.
The downward trend also accelerated on a six-month moving average basis, with residential construction employment declining by approximately 4,583 jobs per month in October, compared with 3,283 in September. Despite the ongoing contraction, the unemployment rate among construction workers improved to 4.1%, down from 4.3% the previous month.
Broader Labor Market Shows Improvement
National employment conditions strengthened during October, with payroll gains averaging 86,000 jobs per month through the first 10 months of 2026. This represents an improvement from the 68,000 monthly average reported through September and the significantly weaker average of 10,000 jobs per month recorded in 2025.
Health care led employment growth with 42,000 new positions, followed by transportation and warehousing, which added 25,000 jobs. Financial activities and retail trade also recorded modest gains, while leisure and hospitality and wholesale trade experienced employment declines.
The unemployment rate declined to 4.1% from 4.2% in September, while the labor force participation rate increased to 61.9%, marking its fourth consecutive monthly improvement.
Wage Growth Continues to Moderate
Wage growth also showed signs of easing, with average hourly earnings increasing 3.1% year over year in October to $38.00, compared with an upwardly revised 3.2% annual increase in September. The slowdown suggests moderating wage pressures across the broader labor market.
For the single-family rental (SFR), build-to-rent (BTR), and multifamily industries, continued residential construction job losses highlight ongoing pressure on the housing development sector. Although overall employment conditions are improving, sustained weakness in residential building activity and contractor employment could reflect broader challenges facing housing construction and development.
Source: NAHB Eye on Housing
