Revised JOLTS Data Show Slowing Job Openings


Due to tightened monetary policy, the count of open jobs for the economy and construction is declining, per the Bureau of Labor Statistics Job Openings and Labor Turnover Survey (JOLTS). This is consistent with a somewhat cooler economy, which is a positive sign for future inflation readings. In April, the number of open jobs for the economy fell to 8.06 million. This is smaller than the 9.90 million estimate reported a year ago. NAHB analysis indicate that this number must fall back below 8 million for the Federal Reserve to feel more comfortable about labor market conditions and their potential impacts on inflation, which means we will be near that range in the coming months. While the Fed intends for higher interest rates to have an impact on the demand-side of the economy, the ultimate solution for the labor shortage will not be found by slowing worker demand, but by recruiting, training and retaining skilled workers. This is where the risk of a monetary policy mistake had some risk of arising. Good news for the labor market does not automatically imply bad news for inflation. Last month, the number of open construction sector jobs originally posted a surprising decline for March, falling from 456,000 in February to just 274,000. However, the March estimate was, as expected, revised significantly higher to 346,000. This month, the initial April estimate shows a further decline to 338,000 open jobs in construction. There are elements of the construction sector slowing as higher rates for longer holds, most notably multifamily development. The open job count was 363,000 a year ago during a period of weaker single-family home construction. The construction job openings rate decreased to 3.9% in April, the lowest reading since March 2023. However, while this rate may be revised higher next month, the recent trend for construction is one of cooling for the construction labor market. The construction sector layoff rate declined to 1.9% compared to 2.5% a year ago. The hiring rate decreased to 4.3% in April, compared to 4.6% from a year ago. Discover more from Eye On Housing Subscribe to get the latest posts to your email.

Revised JOLTS Data Show Slowing Job Openings2024-06-04T10:19:23-05:00

A Strong Quarter for Townhouse Construction


Year-over-year gains for townhouse construction continued at the start of 2024 as demand for medium-density housing continues to be strong. According to NAHB analysis of the most recent Census data of Starts and Completions by Purpose and Design, during the first quarter of 2024, single-family attached starts totaled 42,000, which is 45% higher than the first quarter of 2023. Over the last four quarters, townhouse construction starts totaled a strong 171,000 homes, which is 21% higher than the prior four-quarter period (141,000). Townhouses made up almost 18% of single-family housing starts for the first quarter of the year. Using a one-year moving average, the market share of newly-built townhouses stood at 17.2% of all single-family starts for the first quarter. With recent gains, the four-quarter moving average market share is the highest on record, for data going back to 1985. Prior to the current cycle, the peak market share of the last two decades for townhouse construction was set during the first quarter of 2008, when the percentage reached 14.6%, on a one-year moving average basis. This high point was set after a fairly consistent increase in the share beginning in the early 1990s. The long-run prospects for townhouse construction are positive given growing numbers of homebuyers looking for medium-density residential neighborhoods, such as urban villages that offer walkable environments and other amenities.  Where it can be zoned, it can be built. Discover more from Eye On Housing Subscribe to get the latest posts to your email.

A Strong Quarter for Townhouse Construction2024-05-16T11:16:56-05:00

Mortgage Activity Remains Lower Midway Through Spring Buying Season


Per the Mortgage Bankers Association’s (MBA) survey through the week ending May 3rd, total mortgage activity increased 2.6% from the previous week, and the average 30-year fixed-rate mortgage (FRM) rate fell 11 basis points to 7.18%. The 30-year FRM has risen 17 basis points over the past month as rates remained at around seven percent for the fifth consecutive week. The Market Composite Index, a measure of mortgage loan application volume, rose by 2.6% on a seasonally adjusted (SA) basis from one week earlier after falling the two weeks prior. Week-over-week, both purchasing and refinancing activity rose with purchasing activity increasing 1.8% and refinancing activity increasing 4.5%. Despite both the purchase and refinance indexes increasing over the week, both remained below 2023 levels. The purchase index was down 17.0%, while the refinance index was down 5.8% from a year ago. The refinance share of mortgage activity rose from 30.2% to 30.6% over the week, while the adjustable-rate mortgage (ARM) share of activity fell from 7.8% to 7.7%. The average loan size for purchases was $443,200 at the start of May, up from $442,800 over the month of April. The average loan size for refinancing decreased from $255,300 in April to $255,100 in May. The average loan size for an ARM was up at the start of May to $984,500, while the average loan size for a FRM fell to $335,800. Discover more from Eye On Housing Subscribe to get the latest posts to your email.

Mortgage Activity Remains Lower Midway Through Spring Buying Season2024-05-08T12:29:10-05:00

Residential Building Wages Continued to Rise


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


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

States with Highest and Fastest Rising Construction Wages, 2024


Reflecting persistent long-term labor challenges, wages in construction continue to rise, often outpacing and exceeding typical earnings in other industries. Not seasonally adjusted (NSA) average hourly earnings (AHE) in construction increased 5% since a year ago and approached the $38 mark in March 2024, according to the latest Current Employment Statistics (CES) report from the Bureau of Labor Statistics (BLS). In Massachusetts, AHE in construction approached $49 (NSA) per hour in February, and ten additional states reported hourly rates exceeding $41. In four states, construction wage growth surpassed 8% (NSA), as of February, the latest month for which the state-level AHE data are available. Average hourly earnings (AHE) in construction vary greatly across 43 states that report these data.Some of the highest AHE are recorded by states in Northeast and along the Pacific coast. As of February 2024, nine states report average earnings (NSA) exceeding $43 per hour, including: Massachusetts – $48.9, Washington – $47.3, New Jersey – $45.6, Alaska – $45.0, Illinois – $44.9, New York – $44.9, Rhode Island – $44.7, California – $44.1, and Oregon – $43. At the same time, the US average hourly earnings in construction are $37.7 (NSA). At the other end of the spectrum are mostly Southern states, with the vast majority reporting non-seasonally adjusted average hourly earnings in construction under $34. The bottom ten states, with the AHE at or below $32 per hour, include seven states in the South. The lowest hourly wages are in neighboring Arkansas ($28.9) and Mississippi ($28), followed by West Virginia ($30.8), South Carolina ($31.3), Florida ($31.4), Alabama ($31.5), New Mexico ($31.6), and Kentucky ($31.7). Maine and Oklahoma, with the AHE at $32 per hour, conclude the bottom ten list. While differences in regional hourly rates reflect variation in the cost of living across states, among other things, the faster growing wages are more likely to indicate specific labor markets that are particularly tight. Year-over-year, all states but Wyoming (where wages grew 11% in a prior year but remained stable at the start of 2024) reported rising not seasonally adjusted hourly wages in February 2024. Four states reported an annual increase in hourly rates between 8% and 9% – Idaho, Wisconsin, Iowa, and Utah – by far outpacing the national average growth of construction wages of 5% (NSA).   As highlighted in the heat map below, AHE grew faster in the southern states, where hourly earnings tend to be lower. The correlation analysis confirms that, since a year ago, hourly earnings in states with lower AHE were more likely to grow faster. Discover more from Eye On Housing Subscribe to get the latest posts to your email.

States with Highest and Fastest Rising Construction Wages, 20242024-05-02T08:19:01-05:00

Lowest Homeownership Rate for Younger Householders in Two Years


The Census Bureau’s Housing Vacancy Survey (CPS/HVS) reported the U.S. homeownership rate declined to 65.6% in the first quarter of 2024. This is 0.1 percentage points lower from the prior quarter reading (65.7%) and is the lowest rate in the last two years. The homeownership rate remains below the 25-year average rate of 66.4%, a multidecade low for housing affordability conditions. The homeownership rate for householders ages less than 35 decreased to 37.7% in the first quarter of 2024. Amidst elevated mortgage interest rates and tight housing supply, affordability is declining for first-time homebuyers. This age group, who are particularly sensitive to mortgage rates and the inventory of entry-level homes, saw the largest decline among all age categories. The national rental vacancy rate stayed at 6.6% for the first quarter of 2024, and the homeowner vacancy rate inched down to 0.8%. The homeowner vacancy rate is still hovering near the lowest rate in the survey’s 67-year history (0.7%). The homeownership rates for all age groups decreased over the last year, except groups aged 45-54 and 55-64 years. The homeownership rates among householders aged less than 35 experienced a 1.6 percentage points decrease from 39.3% to 37.7%. Followed by the 35-44 age group with a 1.2 percentage points decrease from 62.6% to 61.4%. Next, were households aged 65 years and over, who experienced a modest 0.1 percentage point decline. However, homeownership rates of householders aged 45-54 increased to 70.8% in the first quarter of 2024 from 70.1% a year ago. The homeownership rate of households aged 55-64 years edged up to 76.3% from a year ago. The housing stock-based HVS revealed that the count of total households increased to 131.1 million in the first quarter of 2024 from 129.6 million a year ago. The gains are largely due to gains in both renter household formation (907,000 increase), and owner households (907,000 increase). Discover more from Eye On Housing Subscribe to get the latest posts to your email.

Lowest Homeownership Rate for Younger Householders in Two Years2024-04-30T13:18:51-05:00

Student Housing Construction Dips in the First Quarter of 2024


According to the data released by Bureau of Economic Analysis (BEA), private fixed investment in student dormitories edged down 0.1% to a seasonally adjusted annual rate (SAAR) of $4 billion in the first quarter of 2024, after a 2.3% increase in the prior quarter. Private fixed investment in dorms was 10.4% higher than a year ago, but still slightly below the pre-pandemic level. Private fixed investment in student housing experienced a surge after the Great Recession, as college enrollment increased from 17.2 million in 2006 to 20.4 million in 2011. However, during the pandemic, private fixed investment in student housing declined drastically from $4.47 billion (SAAR) in the last quarter of 2019 to a lower annual pace of $3.01 billion in the second quarter of 2021, as COVID-19 interrupted normal on-campus learning. College enrollment fell by 3.6% in the fall of 2020 and by 3.1% in the fall of 2021, according to the National Student Clearinghouse Research Center. Student housing private investment is on the road to recovery as the pandemic has ended. In-person learning requires college students to return to campuses, boosting the student housing sector. Discover more from Eye On Housing Subscribe to get the latest posts to your email.

Student Housing Construction Dips in the First Quarter of 20242024-04-29T11:15:32-05:00

Personal Saving Rate Falls to 3.2% in March


The most recent data release from the Bureau of Economic Analysis (BEA) showed that personal income increased 0.5% in March, up from a 0.3% increase in the prior month. Gains in personal income are largely driven by increases in wages and salaries. As spending outpaced personal income growth, the March personal savings rate dipped to 3.2%. This is 0.4 percentage points lower than the February reading and down by nearly two percentage points from last year. As inflation has almost eliminated compensation gains, people are dipping into savings to support spending. This will ultimately lead to a slowing of consumer spending. Real disposable income, income remaining after adjusted for taxes and inflation, edged up 0.2% in March, up from a dip of 0.1% in February. On a year-over-year basis, real (inflation adjusted) disposable income rose 1.4%. The pace of real personal income growth slowed after reaching 5.3% year-over-year gain in June of 2023. Personal consumption expenditures (PCE) rose 0.8% in March after a 0.8% increase in February. Real spending, adjusted to remove inflation, increased 0.5% in March, with spending on goods rising 1.1% and spending on services up 0.2%. Discover more from Eye On Housing Subscribe to get the latest posts to your email.

Personal Saving Rate Falls to 3.2% in March2024-04-26T12:21:12-05:00

How Rising Costs Affect Home Affordability


NAHB recently updated its 2024 priced out estimates, showing how higher prices and interest rates affect housing affordability. The new estimates show that affordability is a serious problem even before any further price or interest rate increases. Already in 2024, 103.5 million households are not able to afford a median priced new home ($495,750[1]). This is because their incomes are insufficient to qualify for the required mortgage under standard underwriting criteria.  If the median new home price goes up by $1,000, an additional 106,031 households would be priced out of the market. The underwriting criterion used to determine affordability is that the sum of mortgage payments, property taxes, homeowners and private mortgage insurance premiums (PITI) during the first year is no more than 28 percent of the household’s income. Key assumptions include a 10% down payment, a 30-year fixed rate mortgage at an interest rate of 6.5%, and an annual premium starting at 73 basis points for private mortgage insurance. The 2024 priced-out estimates for all states and the District of Columbia and over 300 metropolitan statistical areas are shown in the map below. This map shows detailed information, including the projected 2024 median new home price estimates and the minimum income to secure a mortgage, and the percentage of households unable to afford the new homes. It also shows how a $1,000 increase in price could impact the number of households. Vermont stands out as the state with the highest share of households unable to afford the median-priced new home before any price changes, with approximately 92% of its households falling short on the income needed for a mortgage to buy a median-priced new home. Connecticut and Hawaii follow closely, with 89% and 88.5% of households respectively, facing similar affordability challenges for new homes at the median prices. On the other hand, Virginia is the state with much better affordability, where the median new home price is $462,000, however, around 66% of households still find these new homes unaffordable. San Jose-Sunnyvale-Santa Clara metro area in California stands out due to its exceptionally high median new home price of $1,685,593, requiring a minimum household income of $487,773. This makes it the metro area with the highest percentage of households unable to afford the median-priced new homes. In contrast, the Washington, DC metro area presents a more accessible market, where around 37% households are capable of purchasing new median-priced homes. This indicates a relatively higher level of affordability compared to San Jose metro area. More details, including priced out estimates for every state and over 300 metropolitan areas, and a description of the underlying methodology, are available in the full study. [1] The 2024 US median new home price is estimated by projecting the 2022 preliminary median new home price using the NAHB forecast of the Case-Shiller Home Price Index. Discover more from Eye On Housing Subscribe to get the latest posts to your email.

How Rising Costs Affect Home Affordability2024-04-26T08:19:31-05:00

About My Work

Phasellus non ante ac dui sagittis volutpat. Curabitur a quam nisl. Nam est elit, congue et quam id, laoreet consequat erat. Aenean porta placerat efficitur. Vestibulum et dictum massa, ac finibus turpis.

Recent Works

Recent Posts