State Level Employment Situation: March 2024

2024-04-19T14:16:33-05:00

Nonfarm payroll employment increased in 44 states in March compared to the previous month, while six states and the District of Columbia saw a decrease. According to the Bureau of Labor Statistics, nationwide total nonfarm payroll employment increased by 303,000 in March, following a gain of 270,000 jobs in February. On a month-over-month basis, employment data was most favorable in California, which added 28,300 jobs, followed by New York (+23,900), and then Texas (+19,100). A total of 4,700 jobs were lost across six states and the District of Columbia, with West Virginia reporting the steepest job losses at 2,000. In percentage terms, employment in Arkansas increased the highest at 0.5%, while West Virginia saw the biggest decline at 0.3% between February and March. Year-over-year ending in March, 2.9 million jobs have been added to the labor market. Except for Oregon, all other states and the District of Columbia added jobs compared to a year ago. The range of job gains spanned from 500 jobs in Louisiana to 270,700 jobs in Texas. Conversely, Oregon lost a total of 1,900 jobs on a year-over-year basis. In percentage terms, Idaho reported the highest increase at 3.7%, while Oregon showed the largest decrease at 0.1% compared to a year ago. Across the nation, construction sector jobs data[1]—which includes both residential and non-residential construction— showed that 36 states and the District of Columbia reported an increase in March compared to February, while 13 states lost construction sector jobs. The one remaining state, Rhode Island, reported no change on a month-over-month basis. New York, with the highest increase, added 9,500 construction jobs, while Oregon, on the other end of the spectrum, lost 2,300 jobs. Overall, the construction industry added a net 39,000 jobs in March compared to the previous month. In percentage terms, New York reported the highest increase at 2.5% and Oregon reported the largest decline at 2.0%. Year-over-year, construction sector jobs in the U.S. increased by 270,000, which is a 3.4% increase compared to the March 2023 level. California added 33,900 jobs, which was the largest gain of any state, while New York lost 9,700 construction sector jobs. In percentage terms, Alaska had the highest annual growth rate in the construction sector at 16.2%. Over this period, Washington reported the largest decline of 3.6%. [1] For this analysis, BLS combined employment totals for mining, logging, and construction are treated as construction employment for the District of Columbia, Delaware, and Hawaii. Discover more from Eye On Housing Subscribe to get the latest posts to your email.

State Level Employment Situation: March 20242024-04-19T14:16:33-05:00

Single-Family Permits Performing Well in February 2024

2024-04-12T09:16:40-05:00

Over the first two months of 2024, the total number of single-family permits issued year-to-date (YTD) nationwide reached 155,236. On a year-over-year (YoY) basis, this is an increase of 38.4% over the February 2023 level of 112,131. Year-to-date ending in February, single-family permits were up in all four regions. The range of permit increase spanned 54.2% in the West to 22.2% in the Northeast. The Midwest was up by 42.7% and the South was up by 34.6% in single-family permits during this time. For multifamily permits, the regions were split, with half posting increases and the other posting decreases. The Northeast was up by 95.7% and the Midwest was up by 15.2%, while the South posted a decline of 39.0% and the West declined by 37.7%. Between February 2024 YTD and February 2023 YTD, 48 states posted an increase in single-family permits. Rhode Island, Alaska, and the District of Columbia reported declines in single-family permits. The range of increases spanned 106.4% in Montana to 3.3% in North Dakota. The ten states issuing the highest number of single-family permits combined accounted for 66.6% of the total single-family permits issued. Texas, the state with the highest number of single-family permits, issued 26,454 permits over the first two months of 2024, which is an increase of 49.0% compared to the same period last year. The succeeding highest state, Florida, was up by 27.2% while the next highest, North Carolina, posted an increase of 25.4%. Year-to-date ending in February, the total number of multifamily permits issued nationwide reached 78,259. This is 22.2% below the February 2023 level of 100,633. Between February 2024 YTD and February 2023 YTD, 21 states recorded growth in multifamily permits, while 29 states and the DC recorded a decline. Delaware (+485.3%) led the way with a sharp rise in multifamily permits from 34 to 199, while Alaska had the greatest decline of 93.9% from 82 to five. The ten states issuing the highest number of multifamily permits combined accounted for 65.3% of the multifamily permits issued. Over the first two months of 2024, Texas, the state with the highest number of multifamily permits issued, experienced a decline of 40.0%. Following closely, the second-highest state in multifamily permits, New York, saw an increase of 292.8%. Florida, the third largest multifamily issuing state, declined by 45.5%. At the local level, below are the top ten metro areas that issued the highest number of single-family permits. For multifamily permits, below are the top ten local areas that issued the highest number of permits. Discover more from Eye On Housing Subscribe to get the latest posts to your email.

Single-Family Permits Performing Well in February 20242024-04-12T09:16:40-05:00

Residential Building Wages See Fastest Growth in More Than Two Years

2024-04-08T09:16:39-05:00

Residential building workers’ wage growth accelerated to 6.2% in February. After a 0.3% increase in June 2023, the year-over-year (YOY) growth rate for residential building worker wages have been trending up over the past eight months. The recent acceleration in wage growth was mainly due to the ongoing skilled labor shortage in the construction labor market. Demand for construction labor has remained strong. As mentioned in the latest JOLTS blog, the number of open construction jobs rose to 441,000 in February, from 425,000 in January. The ongoing skilled labor shortage continues to challenge the construction sector. According to the Bureau of Labor Statistics (BLS) report, average hourly earnings (AHE) for residential building workers* was $31.40 per hour in February 2024, increasing 6.2% from $29.57 per hour a year ago. This was 14.8% higher than the manufacturing’s average hourly earnings of $27.36 per hour, 7.9% higher than transportation and warehousing ($29.10 per hour), and 14.1% lower than mining and logging ($36.55 per hour). Note: *Data used in this post relate to production and nonsupervisory workers in the residential building industry. This group accounts for approximately two-thirds of the total employment of the residential building industry.

Residential Building Wages See Fastest Growth in More Than Two Years2024-04-08T09:16:39-05:00

U.S. Economy Added 303,000 Jobs in March

2024-04-05T14:19:10-05:00

Job growth accelerated in March, following a strong gain in February. Furthermore, the unemployment rate fell to 3.8%. March’s jobs report shows that the labor market remains resilient despite elevated interest rates. The strong job numbers likely reduce prospects for a Federal Reserve rate cut in the near-term (NAHB has just two rate cuts in our forecast for 2024). Also, for March 2024, we saw the wage growth slow down. On a year-over-year basis (YOY), wages grew 4.1% in March, the lowest annual gain since June 2021. Wage growth is positive if matched by productivity growth. If not, it can be a sign of lingering inflation. Total nonfarm payroll employment increased by 303,000 in March, greater than the downwardly revised increase of 270,000 jobs in February, as reported in the Employment Situation Summary. This marks the largest monthly gain in the past ten months and the 39th straight month of gain. The monthly change in total nonfarm payroll employment for January was revised up by 27,000, from +229,000 to +256,000, while the change for February was revised down by 5,000 from +275,000 to +270,000. Combined, the revisions were 22,000 higher than the original estimates. Despite restrictive monetary policy, nearly 7.3 million jobs have been created since March 2022, when the Fed enacted the first interest rate hike of this cycle. In the first three months of 2024, 829,000 jobs were created, and monthly employment growth averaged 276,000 per month, compared with a 251,000 monthly average gain in 2023. In March, the unemployment rate fell to 3.8%, from 3.9% in February. The number of unemployed persons declined by 29,000 to 6.4 million, while the number of employed persons rose by 498,000. Meanwhile, the labor force participation rate, the proportion of the population either looking for a job or already holding a job, rose two percentage points to 62.7%. It marks the first increase since November 2023. Moreover, the labor force participation rate for people aged between 25 and 54 ticked down to 83.4%. While the overall labor force participation rate is still below its pre-pandemic levels at the beginning of 2020, the rate for people aged between 25 and 54 exceeds the pre-pandemic level of 83.1%. The health care (+72,000), government (+71,000), and construction (+39,000) sectors led March’s job gains, while employment in manufacturing, wholesale trade, transportation and warehousing, information, financial activities, and professional and business services showed little or no change in March. Employment in leisure and hospitality has returned to its pre-pandemic level in February 2020. Employment in the overall construction sector increased by 39,000 in March, following an upwardly revised 26,000 gains in February. While residential construction gained 14,400 jobs, non-residential construction employment added 24,600 jobs for the month. Residential construction employment now stands at 3.3 million in March, broken down as 941,000 builders and 2.4 million residential specialty trade contractors. The 6-month moving average of job gains for residential construction was 5,500 a month. Over the last 12 months, home builders and remodelers added 78,800 jobs on a net basis. Since the low point following the Great Recession, residential construction has gained 1,366,300 positions. In March, the unemployment rate for construction workers declined to 4.3% on a seasonally adjusted basis. This marks the lowest rate in the past nine months. The unemployment rate for construction workers remained at a relatively lower level, after reaching 14.2% in April 2020, due to the housing demand impact of the COVID-19 pandemic.

U.S. Economy Added 303,000 Jobs in March2024-04-05T14:19:10-05:00

February Gains for Single-Family Construction Spending

2024-04-01T12:14:46-05:00

NAHB analysis of Census data shows that private residential construction spending rose 0.7% in February, the third month of gains in a row. It stood at a seasonally adjusted annual pace of $901.1 billion. The monthly increase in total construction spending is attributed to more single-family construction and improvements. Spending on single-family construction rose 1.4% in February. This marks the tenth straight month of increases since April 2023. The gain for single-family construction is aligned with the strong reading of single-family starts and rising builder sentiment, as the lack of existing home inventory and strong demand are boosting new construction. Compared to a year ago, spending on single-family construction was 17.2% higher. Multifamily construction spending went down 0.2% in February after a dip of 0.8% in January. However, spending on multifamily construction was 6.1% higher than a year ago, as a large stock of multifamily housing is under construction. Private residential improvement spending inched up 0.2% in February but was 5.3% lower compared to a year ago. The NAHB construction spending index is shown in the graph below (the base is February 2000).  The index illustrates how spending on single-family construction experienced solid growth since May 2023 under the pressure of supply-chain issues and elevated interest rates. Multifamily construction spending growth stayed almost unchanged in the last three months, while improvement spending has slowed since mid-2022. Spending on private nonresidential construction was up 12.6% over a year ago. The annual private nonresidential spending increase was mainly due to higher spending for the class of manufacturing ($53.7 billion), followed by the power category ($0.7 billion).

February Gains for Single-Family Construction Spending2024-04-01T12:14:46-05:00

Coastal Construction: Outsized Multifamily Construction Compared to Single-Family

2024-03-27T07:18:55-05:00

As part of the recently published HBGI, new NAHB analysis of residential permit data shows that about a quarter of single-family construction takes place in coastal counties. Coastal counties, as defined by U.S. Census Bureau, are counties that are adjacent to coastal water or a territorial sea. These coastal counties are grouped into three regions: the Atlantic, Gulf of Mexico, and Pacific. The four-quarter moving average market share (shown below) for single-family construction in coastal counties has marginally changed over the past nine years. The lowest market share occurred in the first quarter of 2021 at 23.09% of the market. After this minimum, the share rose to a peak of 25.01% in the second quarter of 2023. For the multifamily market, construction in coastal areas has been trending downward over the past nine years. The four-quarter moving average peaked during this period in the fourth quarter of 2015 at 43.51%. The share remained relatively level around 35% until 2021 when it began to descend. The current market share for coastal areas in the multifamily construction is 30.32%. While the coastal market share of multifamily construction has been falling recently, it has historically held a larger share compared to single-family coastal construction. Census estimates reveal that the seven densest populated counties (population per square mile) in the U.S. are coastal counties. Higher population density makes it difficult to construct single-family housing due to limited space availability, making multifamily construction the more economical option. Due to the population density of multiple coastal counties, demand for multifamily construction in coastal counties has been continually higher than that of single-family building.Additionally, the annual population share of coastal counties has remained relatively consistent at 28% of the total U.S. population. This share was at 28.72% in 2021 but has fallen very slightly over the past two years to 28.21% in 2023.

Coastal Construction: Outsized Multifamily Construction Compared to Single-Family2024-03-27T07:18:55-05:00

Moderating Interest Rates, Pent-up Demand Push Single-Family Starts Higher

2024-03-19T09:20:28-05:00

Pent-up demand, moderating interest rates, and a lack of existing inventory helped push single-family starts in February to their highest level since April 2022. Overall housing starts increased 10.7% in February to a seasonally adjusted annual rate of 1.52 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The February reading of 1.52 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts increased 11.6% to a 1.13 million seasonally adjusted annual rate. Single-family starts are also up 35.2% compared to a year ago. The three-month moving average (a useful gauge given recent volatility) is up to over 1.0 million starts, as charted below. The multifamily sector, which includes apartment buildings and condos, increased 8.3% to an annualized 392,000 pace for 2+ unit construction in February. The three-month moving average for multifamily construction has been trending up to a 419,000-unit annual rate. On a year-over-year basis, multifamily construction is down 34.8%. On a regional basis compared to the previous month, combined single-family and multifamily starts are 10.3% lower in the Northeast, 50.7% higher in the Midwest, 15.7% higher in the South and 7.9% lower in the West. As an indicator of the economic impact of housing, there are now 683,000 single-family homes under construction; this is 6.1% lower than a year ago. Meanwhile, there are currently 983,000 apartment units under construction. This is up 2.5% compared to a year ago (959,000). Total housing units now under construction (single-family and multifamily combined) are 1.2% lower than a year ago. Overall permits increased 1.9% to a 1.52 million unit annualized rate in February and are up 2.4% compared to February 2023. Single-family permits increased 1.0% to a 1.03 million unit rate and are up 29.5% compared to the previous year. Multifamily permits increased 4.1% to an annualized 487,000 pace but multifamily permits are down 29.0% compared to February 2023, which is a sign of future apartment construction slowing. Looking at regional permit data compared to the previous month, permits are 36.2% higher in the Northeast, 3.8% higher in the Midwest, 1.3% lower in the South and 6.8% lower in the West.

Moderating Interest Rates, Pent-up Demand Push Single-Family Starts Higher2024-03-19T09:20:28-05:00

Home Price Gains Continued in December

2024-02-27T12:16:32-06:00

National home prices continued to increase, hitting a new all-time high in December. Despite high mortgage rates, limited inventory and strong demand continued to push up home prices. Locally, six of 20 metro areas, experienced negative home price appreciation in December. The S&P CoreLogic Case-Shiller U.S. National Home Price Index (HPI), reported by S&P Dow Jones Indices, rose at a seasonally adjusted annual growth rate of 2.4% in December, slower than a 3.0% increase in November. It marks the fourth straight month of deceleration since September. Nonetheless, national home prices are now 70% higher than their last peak during the housing boom in March 2006. On a year-over-year basis (YOY), the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index posted a 5.5% annual gain in December, up from a 5.0% increase in November. It was the highest year-over-year gain over the past twelve months. Home price appreciation slowed greatly over the past year; the average YOY home price gain for 2023 was 2.4%, after the double-digit gains seen in the previous two years. Home prices are stabilizing as more buyers and sellers enter the market. Meanwhile, the Home Price Index, released by the Federal Housing Finance Agency (FHFA), rose at a seasonally adjusted annual rate of 1.2% in December, following a 4.3% increase in November. On a year-over-year basis, the FHFA Home Price NSA Index rose 6.5% in December, down from 6.6% in the previous month. In addition to tracking national home price changes, S&P Dow Jones Indices also reported home price indexes across 20 metro areas in December on a seasonally adjusted basis. While six out of 20 metro areas reported negative home price appreciation, 13 metro areas had positive home price appreciation. Home prices for Cleveland (OH) were unchanged from the previous month. Their annual growth rates ranged from -2.7% to 10.1%. Among all 20 metro areas, 10 metro areas exceeded the national average of 2.4%. Las Vegas led the way with a 10.1% increase, followed by Los Angeles with an 8.6% increase and Miami with an 8.0% increase. The six metro areas that experienced price declines are Portland (-2.7%), Minneapolis (-1.6%), San Francisco (-1.4%), San Diego (-1.3%), Detroit (-0.6%) and Dallas (-0.6%). The scatter plot below lists the 20 major U.S. metropolitan areas’ annual growth rates in November and in December 2023. The X-axis presents the annual growth rates in November; the Y-axis presents the annual growth rates in December. Seven out of the 20 metro areas, the dots above the blue line, had an acceleration in home price growth, while the remaining 13 metro areas, located below the blue line, experienced deceleration. ‹ New Home Sales Up at the Start of 2024Tags: FHFA Home Price Index, home prices, S&P CoreLogic Case-Shiller Home Price Index

Home Price Gains Continued in December2024-02-27T12:16:32-06:00

Homeownership is Key to Household Wealth

2024-02-21T10:15:31-06:00

Homeownership provides a wide range of benefits to households. In addition to providing households with a stable place to live, homeownership also offers an opportunity for households to accumulate assets and build wealth over time through equity. As of 2022, 66.1% of U.S. households owned their homes. For families that owned a home, the median net housing value (the value of a home minus home-secured debt) increased from $139,000 in 2019 to $201,000 in 2022, as home prices rose, and home mortgage debt was approximately flat1. In this article, we use the 2022 data from the Survey of Consumer Finances (SCF) to examine household balance sheets, especially their primary residence, across age and education categories. The 2022 SCF is a detailed triennial cross-sectional survey of U.S. family finances, published by the Board of Governors of the Federal Reserve System. Compared to the quarterly Financial Accounts of the United States (previously known as the Flow of Funds Accounts), which provides aggregate information on household balance sheets, the SCF provides family-level data2 about U.S. household balance sheets every three years since 1989. Homeownership plays an integral role in a household’s accumulation of wealth. According to the analysis of the 2022 SCF, nationally, the primary residence remained the largest asset category on the balance sheets of households in 2022 (as shown in Figure 1 above). At $40.9 trillion, the primary residence accounted for more than one quarter of all assets held by households in 2022, surpassing business interests (20%, $30.8 trillion), other financial assets3 (19%, $29.8 trillion) and retirement accounts (15%, $23.8 trillion). Playing an important role in household wealth accumulation, the primary residence not only represents the largest asset category on the household balance sheet, but also is a widely held category of nonfinancial assets by households. As mentioned earlier, about two out of every three households, 66%, owned a primary residence in 2022. Within the categories of financial assets, just over half of households, 54%, held retirement accounts, and 21% of households owned either stocks or bonds.  Other financial assets, which were held by 99% of households, include items such as checking accounts, money market accounts, and prepaid debit cards, which are often held more to facilitate financial transactions than to build wealth. In Figure 2, the bars represent the distribution of major assets on household balance sheets by age categories in 2022. The results shown in Figure 2 suggest that households generally accumulate more assets as they age. Total assets were $7.6 trillion for households under age 35, while they were $65.9 trillion for households aged 65 or older. The aggregate value of assets held by families where the head was aged 65 or older was approximately nine times larger than those held by families where the head was under age 35. The increases in the total assets among age groups indicate that the value of assets grows with age groups. Moreover, the distribution of major assets on household balance sheets varies by age group. Across age groups where households were under the age of 65, the aggregate value of the primary residence was the largest asset category on these households’ balance sheets. For households aged 65 or older, the primary residence became the second largest asset category, less than other financial assets. Although the aggregate value of the primary residence increases with age, partly reflecting higher homeownership rates across age categories, the aggregate value of the primary residence as a share of total assets declined with age, as shown in Figure 3. The decline in the share of total assets represented by the aggregate value of the primary residence was offset by growth in the share of other asset categories in aggregate, most notably stocks and bonds, other financial assets, and retirement accounts. An analysis of the SCF reveals that higher educational attainment is associated with higher value of asset holdings. The aggregate value of assets held by households with a bachelor’s degree or higher was five times higher than the aggregate value of assets held by those with some college or associate degrees. Notably, the primary residence remains the largest asset category for each educational attainment category. However, the aggregate value of the primary residence as a share of total assets varies by educational attainment categories. For households with a bachelor’s degree or higher, the aggregate value of the primary residence as a share of total assets was 23%, as these households held a greater amount of other assets, such as business interests, other financial assets, and retirement accounts. Meanwhile, for households with no high school diploma or GED, the primary residence accounted for half of their total assets. Note: 1 For details on changes in U.S. Family Finances from 2019 to 2022, see Aladangady, Aditya, Jesse Bricker, Andrew C. Chang, Sarena Goodman, Jacob Krimmel, Kevin B. Moore, Sarah Reber, Alice Henriques Volz, and Richard A. Windle (2023). Changes in U.S. Family Finances from 2019 to 2022: Evidence from the Survey of Consumer Finances. Washington: Board of Governors of the Federal Reserve System, October, https://www.federalreserve.gov/publications/files/scf23.pdf. 2 According to the SCF, the term “families”, used in the SCF, is more comparable with the U.S. Census Bureau definition of “households” than with its use of “families”. More information can be found here: https://www.federalreserve.gov/publications/files/scf23.pdf. 3 Other financial assets include loans from the household to someone else, future proceeds, royalties, futures, non-public stock, deferred compensation, oil/gas/mineral investments, and cash, not elsewhere classified. 4 Other residential real estate includes land contracts/notes household has made, properties other than the principal residence that are coded as 1-4 family residences, time shares, and vacation homes. 5 Other nonfinancial assets defined as total value of miscellaneous assets minus other financial assets. ‹ New Single-Family Home Size Moves LowerTags: asset, home mortgage, homeownership, household balance sheets, primary residence, primary residence equity, SCF, survey of consumer finances

Homeownership is Key to Household Wealth2024-02-21T10:15:31-06:00

Residential Building Material Price Increase to Start 2024

2024-02-16T12:23:16-06:00

By Jesse Wade on February 16, 2024 • The latest Producer Price Index, reported by U.S. Bureau of Labor Statistics, indicated that inputs to residential construction, goods less foods and energy (residential building materials, not seasonally adjusted) increased 1.28% between December 2023 and January 2024. This was the largest monthly change for the index since March of 2022, when it increased by 2.07%. The year-over-year change of the index was 1.91%, the largest yearly increase since February of 2023. The seasonally adjusted Producer Price Index for final demand goods decreased 0.2% in January, a fourth consecutive decrease for the index. The PPI for final demand energy decreased 1.7%, while final demand goods less foods and energy increased 0.3% in January. On a yearly basis, between January 2023 and 2024, the PPI for final demand goods was down 1.7%, with final demand energy down 9.8%, and final demand goods less foods and energy up 1.6%. The seasonally adjusted PPI for softwood lumber continued to fall as it decreased for the 6th consecutive month, down 1.82% in January. Over the past year, softwood lumber prices have been down 8.98%. Earlier this month, the U.S. Department of Commerce signaled plans to increase tariffs on Canadian softwood lumber from 8.05% to 13.86% this summer or early fall. The not seasonally adjusted PPI for gypsum building materials did not change over the month of January, but was 1.92% lower than last year. Ready-mix concrete seasonally adjusted prices increased in January 1.37% after falling 1.27% in December. On a yearly basis, ready-mix concrete was up 6.88% from January 2023. The not seasonally adjusted PPI for steel mill products continued to rise for the second straight month, up 5.4% in January. Over the year, steel mill products are up 4.39%. ‹ Best Quarter for Townhouse Construction Since 2006Tags: construction costs, inflation, lumber prices, ppi, producer price index, producer prices, ready-mix concrete, softwood lumber, steel

Residential Building Material Price Increase to Start 20242024-02-16T12:23:16-06:00
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