You can though. Most of the labor is in skills that are easy to teach. You can take your half your seconds and promote to foremen, the other half as seconds under the old seconds. The foremen get the old third line as seconds, and you hire all new third-line people. There are a few people who aren't worthy of, or don't want that promotion, but overall the limit is how fast you can convince inexperienced people to work for you. This process can repeat yearly. You can also work more overtime - money talks to a lot of young people.
You do take a small productivity hit, so it isn't all smooth. Still there is plenty of opportunity to expand to meet demand.
With residential construction, most of the jobs are being contracted and subcontracted out, so promoting new foreman, etc. isn't even overhead the builder worries about. They just get new crews bidding on jobs out of nowhere
You are at least half right. The new crews are not out of nowhere though - the builders know who the good foremen are, so when those foremen go on their own they will take them. Builders don't just take bids from anyone, they call the companies they always use to bid on a job. The builders often keep the same crews busy year round: there is no bidding, just at the end of one job they tell the crew where the next job is. When a builder has more work than crews they contact their current sub contractors and ask if any want to expand.
You do take a small productivity hit, so it isn't all smooth. Still there is plenty of opportunity to expand to meet demand.