Job Gains Continue in February Amid Mixed Signals

2023-03-10T12:26:11-06:00

Job growth continued in February. After a revised 504,000 job gain in January, total nonfarm payroll employment increased by 311,000 in February, and the unemployment rate edged up to 3.6% from 3.4% in January. Wage growth increased to a 4.6% year-over-year gain from 4.4% last month, but down compared to February 2022. Today’s job report indicates that, overall, the labor market is still strong, but showing signs of slowing of a strong start for the year. Construction industry employment (both residential and non-residential) totaled 7.9 million and exceeds its February 2020 level. Residential construction gained 12,400 jobs, while non-residential construction employment gained 11,600 jobs in February. Residential construction employment exceeds its level in February 2020, while all non-residential construction jobs lost in March and April 2020 have now been recovered. Total nonfarm payroll employment increased by 311,000 in February, following a gain of 504,000 in January, as reported in the Employment Situation Summary. The estimates for the previous two months were revised downward. The estimate for December was revised down by 21,000 from +260,000 to +239,000, while the January increase was revised down by 13,000, from +517,000 to +504,000. Despite tight monetary policy, over 4.3 million jobs have been created since March 2022, when the Fed enacted the first interest rate hike in more than three years. The unemployment rate edged up to 3.6% in February. The number of employed persons increased 177,000, while the number of unemployed persons rose 242,000. Meanwhile, the labor force participation rate, the proportion of the population either looking for a job or already holding a job, edged up 0.1 percentage point to 62.5% in February, reflecting the increase in the number of persons in the labor force (+419,000). Moreover, the labor force participation rate for people who aged between 25 and 54 increased to 83.1%. While the overall labor force participation rate is still below its pre-pandemic levels at the beginning of 2020, the rate for people who aged between 25 and 54 is back to the pre-pandemic level. For industry sectors, leisure and hospitality (+105,000), retail trade (+50,000), government (+46,000), professional and business services (+45,000), and health care (+44,000) have notable job gains in February. Employment in the overall construction sector rose by 24,000 in February, following a 35,000 gain in January. Residential construction gained 12,400 jobs, while non-residential construction employment gained 11,600 jobs in February. Residential construction employment now stands at 3.3 million in February, broken down as 939,000 builders and 2.3 million residential specialty trade contractors. The 6-month moving average of job gains for residential construction was 6,917 a month. Over the last 12 months, home builders and remodelers added 90,300 jobs on a net basis. Since the low point following the Great Recession, residential construction has gained 1,292,600 positions. In February, the unemployment rate for construction workers decreased by 0.3 percentage points to 4.9% on a seasonally adjusted basis. The unemployment rate for construction workers has been trending lower, after reaching 14.2% in April 2020, due to the housing demand impact of the COVID-19 pandemic. Related ‹ Households’ Real Estate Asset Value Falls for First Time Since 2012Tags: employment, labor force, labor force participation rate, residential construction employment

Job Gains Continue in February Amid Mixed Signals2023-03-10T12:26:11-06:00

Home Price Gains Weakened in December

2023-02-28T10:21:37-06:00

Seasonally adjusted home prices continued to fall in December and have declined for six consecutive months due to high mortgage rates and economic uncertainty. Locally, all 20 metro areas, reported by S&P Dow Jones Indices, experienced negative home price appreciation in December. The S&P CoreLogic Case-Shiller U.S. National Home Price Index, reported by S&P Dow Jones Indices, fell at a seasonally adjusted annual growth rate of 4.1% in December, following a 3.4% decline in November and a 2.8% decrease in October. After a decade of growth, home prices started to decline in July, driven by elevated mortgage rates and weakening buyer demand. The July decrease marked the first decline since February 2012, and this month’s decline marks the sixth consecutive monthly decline. Nonetheless, national home prices are now 61% higher than their last peak during the housing boom in March 2006. On a year-over-year basis, the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index posted a 5.8% annual gain in December, down from 7.6% in November. Year-over-year home price appreciation slowed for the ninth consecutive month as the monthly growth rates have turned negative. Meanwhile, the Home Price Index, released by the Federal Housing Finance Agency (FHFA), decreased at a seasonally adjusted annual rate of 1.2% in December, following a 1.4% decrease in November. On a year-over-year basis, the FHFA Home Price NSA Index rose by 6.6% in September, down from 8.2% in the previous month. The FHFA thus confirmed the slowdown in home price appreciation. In addition to tracking national home price changes, S&P Dow Jones Indices reported home price indexes across 20 metro areas in December. All 20 metro areas reported negative home price appreciation. Their annual growth rates ranged from -16.5% to -1.4% in December. Las Vegas, Phoenix, and Portland experienced the most monthly declines in home prices. Las Vegas declined 16.5%, while Phoenix and Portland declined 14.8% and 14.7%, respectively. The scatter plot below lists the 20 major U.S. metropolitan areas’ annual growth rates in November and in December 2022. The X-axis presents the annual growth rates in November; the Y-axis presents the annual growth rates in December.  Compared to last month, home prices declined faster in December in the following 11 metro areas: San Diego, Denver, Washington, DC, Miami, Chicago, Detroit, Minneapolis, Las Vegas, Cleveland, Portland, and Seattle. Related ‹ Apartment Absorption Rate Falls but Remains above 60%Tags: FHFA Home Price Index, home prices, S&P CoreLogic Case-Shiller Home Price Index

Home Price Gains Weakened in December2023-02-28T10:21:37-06:00

Materials Remain Builders’ Top Challenge, but Inflation and Interest Rates are Threatening

2023-02-13T09:19:33-06:00

By Ashok Chaluvadi on February 13, 2023 • The price and availability of building materials again topped the list of problems builders faced last year, while interest rates (along with general inflation and negative media reports) moved considerably up the list.  According to special questions on the January 2023 survey for the NAHB/Wells Fargo Housing Market Index, building material prices were a significant issue for 96% of builders in 2022. The second most widespread problem in 2022 was availability/time it takes to obtain building materials, cited by 86% of builders.  These were the same two problems that topped the list in 2021.  Cost and availability of labor has also been a relatively widespread problem, reported as a significant by 82% of builders in 2021 and 85% in 2022, a result that is not surprising given the large number of unfilled job openings in the construction industry. Compared to 2021, some of the problems became significantly more widespread in 2022. High interest rates were a problem for only 2% of builders in 2021, but this increased to 66% in 2022. Rising inflation in the US economy was a significant problem for 63% of builders in 2021, compared to 85% in 2022.  And 26 percent of builders said negative media reports making buyers cautious was a significant problem in 2021, compared to 55 percent in 2021. Even more builders—a full 93%—expect high interest rates to be a problem in 2023, up strongly from the 66% who said it was a problem in 2022.  Moreover, both the current and expected numbers were much higher in the recent survey than at any time in the 2011-2021 span. Compared to the supply-side problems of materials and labor, problems attracting buyers have not been as widespread, but builders expect many of them to become more of a problem in 2023. Negative media reports making buyers caution was a significant problem for 55% of builders in 2022, but 79% expect them to be a problem in 2023. Buyers expecting prices or interest rates to decline if they wait was a significant problem for 49% of builders in 2022, compared to 80% who expected it to be an issue in 2023. Concern about employment/economic situation was a problem for only 41% of builders in 2022, but 73% expect it to be a problem in 2023. Gridlock/uncertainty in Washington making buyers cautious was a significant problem for 38% of builders in 2022, compared to 54% who expected it to be a problem in 2023. Finally, buyers unable to sell their existing homes was a significant problem for only 13% of builders in 2022, but 52% expect it to be a problem in 2023. For additional details, including a complete history for each reported and expected problem listed in the survey, please consult the full HMI January2023 Special Survey REPORT. Related ‹ Loan Demand Declines as Credit Standards Tighten in Q4 2022Tags: Building Materials, economics, eye on the economy, home building, housing trends report, inflation, interest rates, single-family

Materials Remain Builders’ Top Challenge, but Inflation and Interest Rates are Threatening2023-02-13T09:19:33-06:00

A New Year Starts with Strong Gains

2023-02-03T11:20:25-06:00

Job growth rebounded in January. After declines for five consecutive months, total nonfarm payroll employment increased by 517,000 in the first month of 2023 and the unemployment rate hit a 53-year low at 3.4% as more people entered the labor market. Construction industry employment (both residential and non-residential) totaled 7.9 million and exceeds its February 2020 level. Residential construction gained 5,500 jobs, while non-residential construction employment gained 19,300 jobs in January. Residential construction employment exceeds its level in February 2020, while 96% of non-residential construction jobs lost in March and April 2020 have now been recovered. Total nonfarm payroll employment increased by 517,000 in January, following a gain of 260,000 in December, as reported in the Employment Situation Summary. It marks the largest monthly job gain in six months. The estimates for the previous two months were revised upward. The estimate for November was revised up by 34,000 from +256,000 to +290,000, while the December increase was revised up by 37,000, from +223,000 to +260,000. The unemployment rate edged down to 3.4% in January, the lowest level since 1969. The number of employed persons increased by 894,000. Meanwhile, the labor force participation rate, the proportion of the population either looking for a job or already with a job, edged up 0.1 percentage point to 62.4% in January, reflecting the increase in the number of persons in the labor force (+866,000). Moreover, the labor force participation rate for people who aged between 25 and 54 increased to 82.7%. Both of these two rates are still below their pre-pandemic levels in the beginning of 2020, and are not fully recovered from the COVID-19 pandemic. In January, job gains were broad-based, led by gains in leisure and hospitality (+128,000), professional and business services (+82,000), and health care (+58,000). Employment in the overall construction sector rose by 25,000 in January, following a 26,000 gain in December. Residential construction gained 5,500 jobs, while non-residential construction employment gained 19,300 jobs in December. Residential construction employment now stands at 3.3 million in January, broken down as 934,000 builders and 2.3 million residential specialty trade contractors. The 6-month moving average of job gains for residential construction was 6,100 a month. Over the last 12 months, home builders and remodelers added 114,600 jobs on a net basis. Since the low point following the Great Recession, residential construction has gained 1,282,900 positions. In January, the unemployment rate for construction workers ticked up by 0.1 percentage point to 4.4% on a seasonally adjusted basis. The unemployment rate for construction workers has been trending lower, after reaching 14.2% in April 2020, due to the housing demand impact of the COVID-19 pandemic. Related ‹ Further Downshift for the FedTags: employment, labor force, labor force participation rate, residential construction employment

A New Year Starts with Strong Gains2023-02-03T11:20:25-06:00

Unaffordable Prices Are Back on Top as Most Common Reason Buyers Can’t Make Purchase

2023-02-01T09:16:49-06:00

By Rose Quint on February 1, 2023 • An earlier post revealed that 65% of buyers who were actively engaged in the process of finding a home in the fourth quarter of 2022 have spent 3+ months searching for a home without success. The inability to find an affordable home (45%) is the most common reason buyers looking for 3+ months can’t make a purchase.  In second place follow the inability to find a home in a desirable neighborhood and getting outbid by other buyers (tied at 30%). When asked what they are most likely to do next if still unable to find a home in the next few months, 46% of active buyers searching for 3+ months said they will continue looking for the ‘right’ home in the same location (down from 50% a quarter earlier); 38% will expand their search area (up from 35%), 23% will accept a smaller/older home (down from 33%), and 16% will buy a more expensive home (down from 28%). Meanwhile, the share who plan to give up their home search until next year or later fell to 21%, down from 28% in the third quarter. This is the first time the share has declined in six quarters. **Results come from the Housing Trends Report (HTR) – a research product created by the NAHB Economics team with the goal of measuring prospective home buyers’ perceptions about the availability and affordability of homes for-sale in their markets.  The HTR is produced quarterly to track changes in buyers’ perceptions over time.  All data are derived from national polls of representative samples of American adults conducted for NAHB by Morning Consult.  Results are seasonally adjusted.  A description of the poll’s methodology and sample characteristics can be found here.  This is the final in a series of six posts highlighting results for the 1st quarter of 2022. Related ‹ Fourth Quarter of 2022 Homeownership Rate at 65.9%Tags: housing economics, housing trends report

Unaffordable Prices Are Back on Top as Most Common Reason Buyers Can’t Make Purchase2023-02-01T09:16:49-06:00

Fewer Prospective Buyers Are Fully Engaged in Purchase Process

2023-01-31T09:21:23-06:00

By Rose Quint on January 31, 2023 • Dwindling housing affordability in the fourth quarter of 2022 caused the share of prospective home buyers who are actively engaged in the purchase process (i.e. who have moved beyond just the planning phase) to drop to 46%, down from 59% a quarter earlier. The share of prospective buyers fully engaged in the buying process declined in every region between the third and fourth quarters of 2022: Northeast (62% to 50%), Midwest (53% to 42%), South (51% to 47%), and West (68% to 44%). After reaching a record high of 70% in the third quarter of 2022, the share of active buyers who have spent 3+ months searching for a home to buy eased a bit in the fourth quarter, down to 65%.  As demand has weakened, competition is letting up slightly for those still willing and able to buy a home. * Results come from the Housing Trends Report (HTR) – a research product created by the NAHB Economics team with the goal of measuring prospective home buyers’ perceptions about the availability and affordability of homes for-sale in their markets.  The HTR is produced quarterly to track changes in buyers’ perceptions over time.  All data are derived from national polls of representative samples of American adults conducted for NAHB by Morning Consult.  Results are seasonally adjusted.  A description of the poll’s methodology and sample characteristics can be found here. This is the fifth in a series of six posts highlighting results for the 4th quarter of 2022.  Related ‹ Housing Affordability Goes SouthTags: housing economics, housing trends report

Fewer Prospective Buyers Are Fully Engaged in Purchase Process2023-01-31T09:21:23-06:00

Housing Affordability Goes South

2023-01-30T09:18:23-06:00

By Rose Quint on January 30, 2023 • Buyers’ outlook for housing affordability took a sharp negative turn in the final quarter of 2022, when a record high of 87% reported being able to afford fewer than 50% of the homes for-sale in their markets.  The remaining 13% can afford the majority of homes available, less than half the 31% who could in the third quarter. Affordability expectations between the third and fourth quarters of 2022 worsened in all regions.  The share of buyers able to afford less than half the homes available in their markets rose in the Northeast, from 66% to 89%; in the Midwest, from 83% to 84%; in the South, from 77% to 83%, and in the West, from 58% to 87%. * Results come from the Housing Trends Report (HTR) – a research product created by the NAHB Economics team with the goal of measuring prospective home buyers’ perceptions about the availability and affordability of homes for-sale in their markets.  The HTR is produced quarterly to track changes in buyers’ perceptions over time.  All data are derived from national polls of representative samples of American adults conducted for NAHB by Morning Consult.  Results are seasonally adjusted.  A description of the poll’s methodology and sample characteristics can be found here. This is the fourth in a series of six posts highlighting results for the 4th quarter of 2022.   Related ‹ How Pandemic Changed Living Arrangements of Young AdultsTags: housing affordability, housing economics, housing trends report

Housing Affordability Goes South2023-01-30T09:18:23-06:00

Buyers Expect Less Housing Availability

2023-01-27T09:16:26-06:00

By Rose Quint on January 27, 2023 • After a brief respite earlier in 2022, buyers’ expectations of housing availability soured again at the end of the year.  In the final quarter of 2022, the share of buyers who expect the home search to get easier in the months ahead dropped to 24%, down from 37% in the third quarter. In contrast, 66% expect the search to get harder/stay the same, up from 59%. Housing availability expectations deteriorated in three regions of the country.  In the Northeast, the share of buyers expecting an easier home search in the months ahead dropped from 44% in the third quarter to 28% in the fourth quarter.  In the Midwest, the share dropped from 33% to 19%; and in the West, from 52% to 27%.  The share edged up in the South, from 23% to 24%. Another way to measure buyers’ perceptions of housing inventory is to ask them if they are seeing more/fewer/the same number of homes for-sale (with desired features and price point) in their markets.  By this measure, buyers’ perceptions also worsened.  In the final quarter of 2022, 30% of buyers were seeing more such homes available, down from 36% a quarter earlier. Inventory perceptions weakened across all regions.  From the third to the final quarter of 2022, the share of buyers seeing more homes (with desired features and price point) on the market fell in the Northeast (43% to 26%), Midwest (30% to 23%), the South (33% to 32%), and West (42% to 31%). * Results come from the Housing Trends Report (HTR) – a research product created by the NAHB Economics team with the goal of measuring prospective home buyers’ perceptions about the availability and affordability of homes for-sale in their markets.  The HTR is produced quarterly to track changes in buyers’ perceptions over time.  All data are derived from national polls of representative samples of American adults conducted for NAHB by Morning Consult.  Results are seasonally adjusted.  A description of the poll’s methodology and sample characteristics can be found here. This is the third in a series of six posts highlighting results for the 4th quarter of 2022.  See previous post on plans to buy and new vs. existing preferences. Related ‹ New Home Sales Uptick in December But Market Weakness RemainsTags: housing availability, housing economics, housing trends report

Buyers Expect Less Housing Availability2023-01-27T09:16:26-06:00

Economic Growth and Signs of Cooling Inflation End 2022

2023-01-26T16:25:51-06:00

The U.S. economy continued to grow in the fourth quarter of 2022. As consumer spending and private inventory investment helped increase GDP, residential fixed investment dragged down the contribution to percent change in real GDP by 1.29 percentage points. More importantly, the data from the GDP report suggests that inflation is cooling. The GDP price index, rose 3.5% for the fourth quarter, down from a 9.0% increase in the second quarter and a 4.4% increase in the third quarter. Also, the Personal Consumption Expenditures (PCE) price Index, capturing inflation (or deflation) across a wide range of consumer expenses and reflecting changes in consumer behavior, rose 3.2% in the fourth quarter, compared with a 7.5% increase in the first quarter of 2022. Looking forward, only a mild recession is expected for this cycle due to the Federal Reserve tightening financial conditions. According to the “advance” estimate released by the Bureau of Economic Analysis (BEA), real gross domestic product (GDP) increased at an annual rate of 2.9% in the fourth quarter, following a 3.2% increase in the third quarter. In 2022, real GDP contracted in the first half and then rebounded. For the full year, real GDP increased 2.1% in 2022, down from a 5.9% increase in 2021 and slightly better than NAHB’s forecast of 1.9%. This quarter’s increase reflected increases in private inventory investment, consumer spending, government spending, and nonresidential fixed investment, partially offset by decreases in residential fixed investment and exports. The increase in private inventory investment was led by manufacturing as well as mining, utilities, and construction industries. Consumer spending rose at an annual rate of 2.1% in the fourth quarter, reflecting increases in both services and goods. While expenditures on services increased 2.6% at an annual rate, goods spending increased 1.1% at an annual rate, led by motor vehicles and parts (+7.4%). Meanwhile, federal government spending increased 6.2% in the fourth quarter, led by an increase in nondefense spending, while state and local government spending rose 2.3%, led by an increase in compensation of state and local government employees. The deceleration in real GDP in the fourth quarter mainly reflected a downturn in exports and decelerations in nonresidential fixed investment, state and local government spending and consumer spendings. Nonresidential fixed investment increased 0.7% in the fourth quarter. An increase in intellectual property products was partly offset by a decrease in equipment. Additionally, residential fixed investment (RFI) decreased 26.7% in the fourth quarter. This was the seventh consecutive quarter for which RFI subtracted from the headline growth rate for overall GDP. Within residential fixed investment, single-family structures declined 26.7% at an annual rate, multifamily structures rose 17.3% and other structures (specifically brokers’ commissions) decreased 23.1%. Related ‹ Housing Share of GDP Lower in the Fourth Quarter of 2022New Home Sales Uptick in December But Market Weakness Remains ›Tags: economics, gdp, inflation, macroeconomics, macroeconomy, residential fixed investment

Economic Growth and Signs of Cooling Inflation End 20222023-01-26T16:25:51-06:00

Popularity of New Homes Declines in Final Quarter of 2022

2023-01-25T09:14:25-06:00

By Rose Quint on January 25, 2023 • Interest for new home construction weakened in the fourth quarter of 2022, driven by high mortgage rates and elevated new home prices.  The latest Housing Trends Report (HTR) shows that the share of prospective buyers looking to buy new construction dropped to 20% in the final quarter of 2022, down from 27% a quarter earlier. The latest decline in interest for new homes happened nationwide. From the third to the final quarter of 2022, the share of prospective buyers looking to purchase a new home fell in all four regions, most prominently in the West (31% to 21%), but also in the Northeast (27% to 20%), Midwest (18% to 15%), and South (26% to 20%). * Results come from the Housing Trends Report (HTR) – a research product created by the NAHB Economics team with the goal of measuring prospective home buyers’ perceptions about the availability and affordability of homes for-sale in their markets.  The HTR is produced quarterly to track changes in buyers’ perceptions over time.  All data are derived from national polls of representative samples of American adults conducted for NAHB by Morning Consult.  Results are seasonally adjusted.  A description of the poll’s methodology and sample characteristics can be found here. This is the second in a series of six posts highlighting results for the 4th quarter of 2022.  See previous post on plans to buy. Related ‹ Employment Situation in December: State-Level AnalysisTags: housing economics, housing trends report

Popularity of New Homes Declines in Final Quarter of 20222023-01-25T09:14:25-06:00
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