Existing Home Sales Recede in April

2024-05-22T11:15:35-05:00

Existing home sales fell for the second straight month in April, after a big monthly drop in March, according to the National Association of Realtors (NAR). Meanwhile, low resale inventory and strong demand continued to drive up existing home prices, marking the tenth consecutive month of year-over-year median sales price gains. Due to elevated interest rates, homeowners with lower mortgage rates stayed put and have not wanted to trade in for higher rates. This is driving home prices higher and resale inventory lower. Eventually, mortgage rates are expected to decrease gradually, leading to increased demand (and unlocking lock-in inventory) in the coming quarters. However, that decline is dependent on future inflation reports. Total existing home sales—including single-family homes, townhomes, condominiums, and co-ops— declined 1.9% to a seasonally adjusted annual rate of 4.14 million in April. On a year-over-year basis, sales were 1.9% lower than a year ago. The first-time buyer share rose to 33% in April, up from 32% in March and 29% a year ago. Total housing inventory registered at the end of April was 1.21 million units, up 9% from last month and up 16.3% from a year ago. At the current sales rate, April’s unsold inventory sits at a 3.5-month supply, up from 3.2 months last month and 3.0 months a year ago. This inventory level remains very low compared to balanced market conditions (4.5 to 6 months’ supply) and illustrates the long-run need for more home construction. Homes stayed on the market for an average of 26 days in April, down from 33 days in March, but up from 22 days in April 2023. The April all-cash sales share was 28% of transactions, the same share as last month and a year ago. All-cash buyers are less affected by changes in interest rates. The April median sales price of all existing homes was $407,600, up 5.7% from last year. This marked the highest recorded prices for the month of April. Compared to a year ago, the median single-family prices rose 5.6% to $412,100, and the median condominium/co-op prices increased 5.4% to $365,300. Compared to last month, all four regions saw a decline in existing home sales in April. Sales in the Northeast, Midwest, South, and West decreased 4.0%, 1.0%, 1.6% and 2.6%, respectively. On a year-over-year basis, sales in the Northeast, Midwest, and South decreased 4.0%, 1.0%, and 3.1% in April, while sales in the West rose 1.3%. Discover more from Eye On Housing Subscribe to get the latest posts to your email.

Existing Home Sales Recede in April2024-05-22T11:15:35-05:00

State Level Employment Situation: April 2024

2024-05-17T13:20:43-05:00

Nonfarm payroll employment increased in 38 states and the District of Columbia in April compared to the previous month, while 11 states saw a decrease. Alaska reported no change during this time. According to the Bureau of Labor Statistics, nationwide total nonfarm payroll employment increased by 175,000 in April, following a gain of 315,000 jobs in March. On a month-over-month basis, employment data was most favorable in Florida, which added 45,300 jobs, followed by Texas (+42,600), and then Missouri (+16,700). A total of 22,900 jobs were lost across the 11 states, with New Jersey reporting the steepest job losses at 10,900. In percentage terms, employment increased the highest in Missouri at 0.6%, while South Dakota saw the biggest decline at 0.6% between March and April. Year-over-year ending in April, 2.8 million jobs have been added to the labor market across all 50 states and the District of Columbia. The range of job gains spanned from 1,800 jobs in the District of Columbia to 306,000 jobs in Texas. In percentage terms, the range of job growth spanned 3.4% in Nevada and South Carolina to 0.2% in Maryland. Across the nation, construction sector jobs data1 —which includes both residential and non-residential construction—showed that 28 states reported an increase in April compared to March, while 19 states and the District of Columbia lost construction sector jobs. The three remaining states, Mississippi, Rhode Island, and South Carolina reported no change on a month-over-month basis. Michigan, with the highest increase, added 4,200 construction jobs, while Ohio, on the other end of the spectrum, lost 7,600 jobs. Overall, the construction industry added a net 9,000 jobs in April compared to the previous month. In percentage terms, Michigan reported the highest increase at 2.1% and Iowa reported the largest decline at 3.5%. Year-over-year, construction sector jobs in the U.S. increased by 258,000, which is a 3.2% increase compared to the April 2023 level. Texas added 30,500 jobs, which was the largest gain of any state, while New York lost 7,100 construction sector jobs. In percentage terms, Alaska had the highest annual growth rate in the construction sector at 18.0%. Over this period, Maryland reported the largest decline of 4.0%. 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: April 20242024-05-17T13:20:43-05:00

Housing Costs Continue to Drive Price Gains

2024-05-15T12:18:02-05:00

Both overall and core inflation eased slightly in April amid higher costs for gasoline and shelter. On a year-over-year (YOY) basis, the shelter index rose by 5.5% in April, following a 5.7% increase in March. Despite a slowdown in the YOY increase, shelter costs continue to put upward pressure on inflation, accounting for nearly 70% of the total increase in all items excluding food and energy. This ongoing elevated and uneven inflation is likely to keep the Federal Reserve on hold and delay rate cuts this year. The Fed’s ability to address rising housing costs is limited because increases are driven by a lack of affordable supply and increasing development costs. Additional housing supply is the primary solution to tame housing inflation. The Fed’s tools for promoting housing supply are also constrained. In fact, continued tightening of monetary policy would hurt housing supply because it would increase the cost of AD&C financing. This can be seen on the graph below, as shelter costs continue to rise despite Fed policy tightening. Nonetheless, the NAHB forecast expects to see shelter costs decline further in the coming months.  This is supported by real-time data from private data providers that indicate a cooling in rent growth. The Bureau of Labor Statistics (BLS) reported that the Consumer Price Index (CPI) rose by 0.3% in April on a seasonally adjusted (SA) basis, after an increase of 0.4% in March. It marks the largest monthly increase since June 2009. Excluding the volatile food and energy components, “core” CPI increased by 0.3% in April, after three consecutive months of 0.4% increases. The price index for a broad set of energy sources rose by 1.1% in April, as gasoline prices increased by 2.8%. While energy commodities increased by 2.7%, energy services declined by 0.7%. The food index was unchanged in April, after a 0.1% increase in March. The index for food away from home rose 0.3%, and the index for food at home decreased by 0.2% in April. The shelter index rose by 0.4% for the third straight month and remained the largest factor in the monthly increase in the index for all items less food and energy. Both the indexes for owners’ equivalent rent (OER) and rent of primary residence (RPR) increased by 0.4% over the month. These gains have been the largest contributors to headline inflation in recent months. The indexes for shelter and gasoline together contributed over 70% of the monthly increase in the index for all items. During the past twelve months, on a non-seasonally adjusted (NSA) basis, the CPI rose by 3.4% in April, following a 3.5% increase in March. The “core” CPI increased by 3.6% over the past twelve months, slower than a 3.8% increase in March. It marks the lowest YOY gain since April 2021. Over the past twelve months, the food index rose by 2.2% for the third straight month, while the energy index increased by 2.6%. NAHB constructs a “real” rent index to indicate whether inflation in rents is faster or slower than overall inflation. It provides insight into the supply and demand conditions for rental housing. When inflation in rents is rising faster (slower) than overall inflation, the real rent index rises (declines). The real rent index is calculated by dividing the price index for rent by the core CPI (to exclude the volatile food and energy components). In April, the Real Rent Index rose by 0.1%, after being unchanged in March. Over the first four months of 2024, the monthly growth rate of the Real Rent Index was 0%, on average, slower than the average of 0.2% in 2023. Discover more from Eye On Housing Subscribe to get the latest posts to your email.

Housing Costs Continue to Drive Price Gains2024-05-15T12:18:02-05:00

Mixed Price Changes for Building Materials in April

2024-05-14T11:17:11-05:00

Inputs to residential construction, goods less food and energy, increased for the sixth consecutive month, according to the most recent producer price index (PPI) report published by the U.S. Bureau of Labor Statistics. The index for inputs to residential construction, goods less food and energy, represents building materials used in residential construction. The non-seasonally adjusted index increased 0.14% in April after increasing a revised 0.50% in March and 0.47% in February. The index is up 2.77% from April 2023, the largest yearly increase since 2.80% in February of 2023. The average yearly change, over all 12 months, was 2.50% in 2020, 14.62% in 2021, 15.18% in 2022, and 1.34% in 2023. Over the first four months of 2024, the average change was 2.32%. The seasonally adjusted PPI for final demand increased 2.18% from last year, the largest yearly increase since April 2023 (2.30%). Over the month, the final demand index rose 0.56%. From the BLS, “Nearly three-quarters of the April advance in final demand prices is attributable to a 0.55% increase in the index for final demand services. Prices for final demand goods moved up 0.44%”. The seasonally adjusted PPI for softwood lumber increased 6.20% in April. This was the largest month-over-month increase since January of 2022 when the index shot up 21.56% over the month. From April of 2023, the index was 4.31% lower. The non-seasonally adjusted PPI for gypsum building materials fell 0.74% in April.  Despite falling over the month, prices for gypsum building materials were 1.00% higher than April of last year. The seasonally adjusted PPI for ready-mix concrete fell for the first time in four months, down 0.27% in April. Prices for ready-mix concrete have continued to increase since 2021, as this was only the fourth price decline since January 2021. Year-over-year, ready-mix concrete prices were 8.04% higher. The non-seasonally adjusted PPI for steel mill products fell for the second straight month, down 2.67% for April after an 8.10% decline in March. Prices for steel mill products are 9.79% lower than last year. The non-seasonally adjusted special commodity grouping PPI for copper rose 3.46% in April. Over the year, the index was up 4.46%. Copper futures pricing, not shown here, was trading near $4.90 per pound as of today, its highest level since early 2022 at $5.00 per pound. Discover more from Eye On Housing Subscribe to get the latest posts to your email.

Mixed Price Changes for Building Materials in April2024-05-14T11:17:11-05:00

Residential Building Wages Continued to Rise

2024-05-06T10:16:56-05:00

In March, residential building workers’ wages continued to grow but at a relatively slower pace. After an acceleration of a 6.2% increase in the previous month, the year-over-year (YOY) growth rate for residential building worker wages slowed to 5.1% in March. According to the Bureau of Labor Statistics (BLS) report, average hourly earnings (AHE) for residential building workers* was $31.29 per hour in March. It increased 5.1% from $29.77 per hour a year ago but was lower than $31.41 per hour in February. In March, residential building workers’ wages were 14.0% higher than the manufacturing’s average hourly earnings of $27.45 per hour, 7.7% higher than transportation and warehousing ($29.04 per hour), and 13.7% lower than mining and logging ($36.25 per hour). The ongoing skilled labor shortage continues to challenge the construction sector. Although the number of open construction jobs posted a surprising decline in March, demand for construction labor remained strong. This number may be revised higher in the next report, and we will keep monitoring closely for the following one- or two-months’ data. 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. Discover more from Eye On Housing Subscribe to get the latest posts to your email.

Residential Building Wages Continued to Rise2024-05-06T10:16:56-05:00

Labor Market Softens in April

2024-05-03T11:14:49-05:00

Job growth slowed in April, and the unemployment rate increased to 3.9%, suggesting a cooling labor market after a strong start to the year. Additionally, wage growth continued to slow. In April, wages grew at a 3.9% year-over-year (YOY) growth rate, down 0.7 percentage points from a year ago. It marks the lowest YOY wage gain in nearly three years. Total nonfarm payroll employment increased by 175,000 in April, following the upwardly revised increase of 315,000 jobs in March, as reported in the Employment Situation Summary. This marks the slowest monthly gain in the past 13 months. The monthly change in total nonfarm payroll employment for February was revised down by 34,000, from +270,000 to +236,000, while the change for March was revised up by 12,000, from +303,000 to +315,000. Combined, the revisions were 22,000 lower than the original estimates. Despite restrictive monetary policy, nearly 7.4 million jobs have been created since March 2022, when the Fed enacted the first interest rate hike of this cycle. In the first four months of 2024, 982,000 jobs were created, and monthly employment growth averaged 246,000 per month, compared with a 251,000 monthly average gain for 2023. In April, the unemployment rate rose to 3.9%, from 3.8% in March. It has remained below 4% for the 27th straight month, the longest streak since the 1960s. The number of unemployed persons rose by 63,000, while the number of employed persons rose by 25,000. Meanwhile, the labor force participation rate, the proportion of the population either looking for a job or already holding a job, held at 62.7% for April. Moreover, the labor force participation rate for people aged between 25 and 54 ticked up to 83.5%. 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%. In April, job gains occurred in health care (+56,000), social assistance (+31,000), transportation and warehousing (+22,000), retail trade (+20,000), and construction (+9,000). Employment in the overall construction sector increased by 9,000 in April, following an upwardly revised 40,000 gains in March. While residential construction gained 1,100 jobs, non-residential construction employment added 7,800 jobs for the month. Residential construction employment now stands at 3.4 million in April, broken down as 950,000 builders and 2.4 million residential specialty trade contractors. The 6-month moving average of job gains for residential construction was 5,217 a month. Over the last 12 months, home builders and remodelers added 75,600 jobs on a net basis. Since the low point following the Great Recession, residential construction has gained 1,375,000 positions. In April, the unemployment rate for construction workers rose to 4.8% on a seasonally adjusted basis. 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. Discover more from Eye On Housing Subscribe to get the latest posts to your email.

Labor Market Softens in April2024-05-03T11:14:49-05:00

U.S. Economic Growth Slows in First Quarter

2024-04-25T11:15:29-05:00

Compared to the fourth quarter of 2023, the U.S. economy grew at a noticeably slower pace in the first quarter of 2024 due to an increase in the trade deficit and weaker inventory investment. But it was still on solid ground supported by consumers, the government, and the housing industry. Meanwhile, the data from the GDP report suggests that inflation accelerated. The GDP price index rose 3.1% for the first quarter, up from a 1.6% increase in the fourth quarter of 2023. The Personal Consumption Expenditures (PCE) Price Index, which measures inflation (or deflation) across various consumer expenses and reflects changes in consumer behavior, rose 3.4% in the first quarter. This is up from a 1.8% increase in the fourth quarter of 2024, the biggest gain in a year. According to the “advance” estimate released by the Bureau of Economic Analysis (BEA), real gross domestic product (GDP) expanded at a modest 1.6% annual pace in the first quarter of 2024. This is slower than a 3.4% gain in the fourth quarter of 2023, and the lowest annual growth rate in the past seven quarters. This quarter’s growth was lower than NAHB’s forecast of a 2.0% increase. This quarter’s increase in real GDP reflected increases in consumer spending, residential fixed investment, nonresidential fixed investment, and state and local government spending. Consumer spending, the backbone of the U.S. economy, rose at an annual rate of 2.5% in the first quarter. It reflects an increase in services that were partly offset by a decrease in goods. While expenditures on services increased 4.0% at an annual rate, goods spending decreased 0.4% at an annual rate. The decrease in goods mainly reflects decreases in motor vehicles and parts (-9.0%) and gasoline and other energy goods (-10.9%). In the first quarter of 2024, residential fixed investment (RFI) made its largest contribution to GDP growth since the first quarter of 2021. It rose 13.9% in the first quarter, up from a 2.8% increase in the fourth quarter of 2023. This is the third straight gain after nine consecutive quarters of declines. Within residential fixed investment, single-family structures rose 18.1% at an annual rate, multifamily structures declined 7.4%, and improvements rose 0.9%. Additionally, nonresidential fixed investment increased 2.9% in the first quarter, following a 3.7% increase in the previous quarter. The increase in nonresidential fixed investment mainly reflected an increase in intellectual property products (+5.4%). The increase in state and local government spending primarily reflected an increase in compensation of state and local government employees. The U.S. trade deficit increased in the first quarter as imports increased more than exports. A wider trade deficit shaved 0.86 percentage points off GDP. Imports, which are a subtraction in the calculation of GDP, increased 7.2%, while exports rose 0.9%. Discover more from Eye On Housing Subscribe to get the latest posts to your email.

U.S. Economic Growth Slows in First Quarter2024-04-25T11:15:29-05:00

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

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

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