Unemployment Rises To 3.8% in August

2023-09-01T10:19:26-05:00

The recent employment data indicates that the labor market is cooling gradually due to rising interest rates. Total employment increased by 187,000 and the unemployment rate rose to 3.8% from 3.5%. Wage growth slowed. In August, wages grew at a 4.3% year-over-year growth rate, down 1.1 percentage points from a 5.4% gain in August 2022. The Bureau of Labor Statistics (BLS) announced the preliminary estimate of the annual benchmark revision, indicating March 2023 total nonfarm employment was revised down by 306,000 jobs, a 0.2% decrease from the previous release. Construction was revised up by 30,000 jobs, and manufacturing revised down by 43,000 jobs. The final revision will be issued in February 2024 with the publication of the January 2024 Employment Situation news release. Total nonfarm payroll employment increased by 187,000 in August, following a gain of 157,000 in July, as reported in the Employment Situation Summary. The estimates for the previous two months were revised down. The estimate for June was revised lower by 80,000 from +185,000 to +105,000, while the July increase was revised down by 30,000, from +187,000 to +157,000. Despite restrictive monetary policy, nearly 5.4 million jobs have been created since March 2022, when the Fed enacted the first interest rate hike of this cycle. In the first eight months of 2023, nearly 1.9 million jobs were created, and monthly employment growth averaged 236,000 per month, following the average monthly growth of 399,000 in 2022. The unemployment rate rose by 0.3 percentage points to 3.8% in August. The number of unemployed persons increased by 514,000 to nearly 6.4 million, while the number of employed persons increased by 222,000. Meanwhile, the labor force participation rate, the proportion of the population either looking for a job or already holding a job, rose 0.2 percentage points to 62.8%. Moreover, the labor force participation rate for people who aged between 25 and 54 edged up 0.1 percentage point 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 who aged between 25 and 54 exceeds the pre-pandemic level of 83.1%. For industry sectors, employment in health care (+71,000), leisure and hospitality (+40,000), social assistance (+26,000), and construction (+22,000) continued to trend up in August, while transportation and warehousing lost 34,000 jobs. Employment in the overall construction sector increased by 22,000 in August, following a 16,000 gain in July. While residential construction added 1,400 jobs, non-residential construction employment gained 21,000 jobs. Residential construction employment now stands at 3.3 million in August, broken down as 925,000 builders and 2.4 million residential specialty trade contractors. The 6-month moving average of job gains for residential construction was 3,500 a month. Over the last 12 months, home builders and remodelers added 42,400 jobs on a net basis. Since the low point following the Great Recession, residential construction has gained 1,293,500 positions. In August, the unemployment rate for construction workers rose by 0.4 percentage points to 4.9% 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. Related ‹ 2022 Single-Family Starts by Census DivisionTags: employment, labor force, labor force participation rate, residential construction employment, wage

Unemployment Rises To 3.8% in August2023-09-01T10:19:26-05:00

2022 Single-Family Starts by Census Division

2023-08-30T11:19:07-05:00

By Jing Fu on August 30, 2023 • According to NAHB analysis of the Survey of Construction (SOC), new single-family starts decreased in 2022. Nationally, 1,018,495 new single-family units started construction in 2022, 10% fewer than the number of units started in 2021. It marked the first decrease since 2011 but was still the second highest count since the Great Recession. Among all nine Census divisions, the South Atlantic, West South Central and Mountain Divisions led the way with the most new single-family units started in 2022. These three divisions represent 20 states and Washington, D.C., approximately 41% of United States, while the number of new single-family housing starts in these three divisions accounted for almost two thirds of the total new single-family housing starts. In addition, single-family units started in the Pacific Division decreased to 94,158 in 2022, compared to 106,240 new single-family starts in 2021. There were 85,569 new single-family units started in the East North Central Division in 2022. While the Pacific Division accounted for 9% of the total new single-family housing starts, the East North Central Division accounted for 8%. The other four divisions, including East South Central, West North Central, Middle Atlantic and New England, accounted for the remaining 17% of the total new single-family housing starts. In 2022, eight out of the nine divisions had negative growth rate. The East South Central Division was the only division that had positive annual growth rate. The Mountain Division reported the largest drop among the nine divisions, followed by the West South Central Division with a 12% decrease and the West North Central Division with a 12% decrease as well. Compared to last year, none of the nine divisions had an acceleration in 2022. Related ‹ Home Price Appreciation Continues in JuneTags: annual growth rate, housing starts, nine divisions, single-family

2022 Single-Family Starts by Census Division2023-08-30T11:19:07-05:00

Home Price Appreciation Continues in June

2023-08-29T12:17:55-05:00

By Jing Fu on August 29, 2023 • In June, national home prices continued to increase. Limited inventory and solid but weakened demand put upward pressure on home prices, despite rising mortgage rates. Locally, all 20 metro areas, reported by S&P Dow Jones Indices, had positive home price appreciation in June. The S&P CoreLogic Case-Shiller U.S. National Home Price Index, reported by S&P Dow Jones Indices, rose at a seasonally adjusted annual growth rate of 8.1% in June, slightly slower than a 10.2% increase in May. After seven consecutive months of decline, home prices have increased for five consecutive months since February 2023. National home prices are now 65% 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 0.0% annual gain in June, following a 0.4% decrease in May and a 0.1% decrease in April. Meanwhile, the Home Price Index, released by the Federal Housing Finance Agency (FHFA), rose at a seasonally adjusted annual rate of 4.2% in June, following a 9.2% increase in May. On a year-over-year basis, the FHFA Home Price NSA Index rose by 3.2% in June, up from 3.0% in the previous month. In addition to tracking national home price changes, S&P Dow Jones Indices reported home price indexes across 20 metro areas in June. In June, all 20 metro areas reported positive annual growth rates ranged from 3.6% to 18.9%. Among the 20 metro areas, 11 metro areas exceeded the national average of 8.1%. San Diego, Seattle, and New York had the highest home price appreciation in June. San Diego led the way with an 18.9% increase, followed by Seattle with an 18.2% increase and New York with a 16.4% increase. Related ‹ Job Openings Data Reveal Labor Market CoolingTags: FHFA Home Price Index, home prices, S&P CoreLogic Case-Shiller Home Price Index

Home Price Appreciation Continues in June2023-08-29T12:17:55-05:00

Wood-Framed Home Share Increased for Three Straight Years

2023-08-28T08:22:15-05:00

By Jing Fu on August 28, 2023 • Wood framing remains the most dominant construction method for single-family homes in the U.S., according to NAHB analysis of 2022 Census Bureau data. For 2022 completions, 94% of new homes were wood-framed, another 6% were concrete-framed homes, and less than half a percent was steel-framed. On a count basis, there were 956,000 wood-framed homes completed in 2022. This was a 7% gain over the 2021 total. The wood-framed market share has increased for the past three years, from 90% in 2019 to 94% in 2022. As noted above, steel-framed homes are relatively uncommon, with a total of 3,000 housing completions in 2022, the same amount as the 2021 completions. Concrete-framed homes experienced the third straight decline in 2022. After a 5% decrease in 2021 and a 13% decrease in 2020, the total number of concrete-framed homes decreased 11% from 71,000 completions in 2021 to 63,000 in 2022. Meanwhile, the concrete-framed market share decreased from 10% in 2019 to 6% in 2022. Non-wood based framing methods are primarily concentrated in the South due to residential resiliency requirements. In 2022, concrete-framed homes made up 10% of all homes completed in the South. Approximately two-thirds of steel framed homes completed in 2022 were in the South, with another one-third in the West. Related ‹ AD&C Loans: Rising Rate & Tightening Trends ContinueTags: concrete-framed homes, framing method, single-family construction, SOC, steel-framed homes, wood-framed homes

Wood-Framed Home Share Increased for Three Straight Years2023-08-28T08:22:15-05:00

Home Improvement Loan Applications in 2021: A State- and County-Level Analysis

2023-08-24T08:23:21-05:00

The residential remodeling market has grown rapidly in the past few years, mainly fueled by changes in housing and lifestyle decisions during the pandemic period. According to National Income and Product Accounts (NIPA), expenditures for residential home improvements soared 13% to $328 billion in 2021, from $289 billion in 2020. This marks the largest gain since 1993 (16% increase). Solid existing home sales, high incomes, high home price appreciation, and an aging housing stock supported strong remodeling activity in 2021. While remodeling activity changed over the time, they have also varied across geographic locations. The 2021 Home Mortgage Disclosure Act (HMDA) data, published by Consumer Financial Protection Bureau (CFPB), covers detailed information on residential mortgage lending in 2021, including: the disposition of applications for mortgage credit the type, purpose, and characteristics of home mortgage applications or purchased loans demographic and other information about loan applicants, such as their race, sex, age, and income NAHB’s analysis of the 2021 HMDA data provides insight into remodeling activity by state and across counties in the U.S. With respect to total home improvement loan applications, California is the state that had the highest number of home improvement loan applications in 2021, with 109,856 applications. Florida came in second with 82,341 home improvement loan applications. Wyoming and Alaska had the lowest total numbers of home improvement loan applications, which were below 1,000. When we look at home improvement loan applications per 1,000 population, two mountain states, Utah and Idaho, had the highest number of home improvement loan applications, with a rate of 7.6 and 7.4 applications per 1,000 population. Rhode Island and New Hampshire were the third and fourth state with the most home improvement loan applications, followed by Colorado with a rate of 5.3 applications per 1,000 population. In aggregate, there were 3.3 loan applications for home improvements, for every 1,000 population, in United States. California, the most populous state of the United States, reported 2.8 applications per 1,000 population, which is lower than the national average rate. The analysis of county-level home improvement loan applications per 1,000 population reveals that aggregate market population is not significantly related with the number of per capita home improvement loan applications. In 2021, most of the top 10 largest counties in the United States, by population, had a rate of 2 and below applications. Los Angeles County in California, one of the most populous counties, reported a total of 10 home improvement loan applications in 2021.  Meanwhile, some counties with a lower population had a higher application rate. For example, Hinsdale County in Colorado, the second-least populous county in Colorado, had a total of 167 home improvement loan applications with less than one thousand population. Additionally, the analysis finds that home improvement loan applications are relatively more common in the Pacific and Mountain Divisions. In total, there were 74 counties that reported 10 or higher home improvement loan applications per 1,000 population, and nearly 72% of these counties were in the West. Among all 64 counties in Colorado, 27 counties fell in the darkest blue area in the map above, with a rate of 10 and above applications. The top 5 counties with the highest home improvement loan application rate were: Sedgwick County (CO), Costilla County (CO), Gilpin County (CO), Washington County (CO), and Calhoun County (FL). Related ‹ Multifamily Absorption Rates Move HigherTags: county, HMDA, home improvement loan applications, home improvements, NIPA, remodeling market, state

Home Improvement Loan Applications in 2021: A State- and County-Level Analysis2023-08-24T08:23:21-05:00

Modest Job Gains in July

2023-08-04T10:16:47-05:00

The past two months’ job gains indicate that the job market is cooling from its peak last year and is growing at a moderate pace. Total employment increased by 187,000 and the unemployment rate inched down to 3.5% in July. Wages grew at a 4.4% year-over-year growth rate, down 1.1 percentage points from a 5.4% gain in July 2022. Total nonfarm payroll employment increased by 187,000 in July, following a gain of 185,000 in June, as reported in the Employment Situation Summary. The estimates for the previous two months were revised down. The estimate for May was revised lower by 25,000 from +306,000 to +281,000, while the June increase was revised down by 24,000, from +209,000 to +185,000. Despite restrictive monetary policy, nearly 5.3 million jobs have been created since March 2022, when the Fed enacted the first interest rate hike of this cycle. In the first seven months of 2023, about 1.8 million jobs were created, and monthly employment growth averaged 258,000 per month, following average monthly growth of 399,000 in 2022. The unemployment rate decreased by 0.1 percentage points to 3.5% in July. The number of unemployed persons decreased by 116,000, while the number of employed persons increased by 268,000. Meanwhile, the labor force participation rate, the proportion of the population either looking for a job or already holding a job, was unchanged at 62.6% for the fifth consecutive month. Moreover, the labor force participation rate for people who aged between 25 and 54 edged down 0.1 percentage point 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 who aged between 25 and 54 exceeds the pre-pandemic level of 83.1%. For industry sectors, employment in health care (+63,000), social assistance (+24,000), and construction (+19,000) continued to trend up in July. Employment in the overall construction sector increased by 19,000 in July, following a 26,000 gain in June. While residential construction added 7,800 jobs, non-residential construction employment gained 10,600 jobs in July. Residential construction employment now stands at 3.3 million in July, broken down as 925,000 builders and 2.4 million residential specialty trade contractors. The 6-month moving average of job gains for residential construction was 5,850 a month. Over the last 12 months, home builders and remodelers added 58,400 jobs on a net basis. Since the low point following the Great Recession, residential construction has gained 1,304,700 positions. In July, the unemployment rate for construction workers rose by 0.9 percentage points to 4.5% 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. Related ‹ Lending Standards Tighten Further as Banks Expect More to ComeTags: employment, labor force, labor force participation rate, residential construction employment, wage

Modest Job Gains in July2023-08-04T10:16:47-05:00

Unaffordable Prices & Bidding Wars Hold Buyers Back

2023-08-02T09:34:25-05:00

By Rose Quint on August 2, 2023 • An earlier post revealed that 69% of buyers who were actively engaged in the process of finding a home in the second quarter of 2023 have spent 3+ months searching for a home without success. The inability to find an affordable home remains the most common reason buyers looking for 3+ months can’t make a purchase, cited by 38% (although that is down from 45% in the final quarter of 2022).  Next most common reason is getting outbid by other buyers, at 36% (up from 30% in the final quarter of 2022), followed by the inability to find a home in a desirable neighborhood (up from 30% to 33%) and one with desirable features (up from 28% to 31%). 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; 38% will expand their search area, 30% will accept a smaller/older home (up from 23% in Qtr4’22 and 27% in Qtr1’23), and 25% will buy a more expensive home.  Interestingly, despite bleaker affordability expectations, the share who plan to give up their home search until next year or later fell to 21%, down from 23% in the first quarter of the year. *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 2nd quarter of 2023. See previous posts on plans to buy, new vs. existing preference, housing availability, housing affordability, and active buyers. Related ‹ June Gains in Private Residential Construction SpendingTags: housing economics, housing trends report

Unaffordable Prices & Bidding Wars Hold Buyers Back2023-08-02T09:34:25-05:00

Some Buyers Remain Engaged, Despite Lower Affordability

2023-07-31T09:26:16-05:00

By Rose Quint on July 31, 2023 • Despite lower perceptions of affordability, the share of prospective home buyers who are actively engaged in the purchase process (i.e., have moved beyond the planning phase) remained essentially unchanged between the first and second quarters of 2023, at 56% and 55%, respectively. The lack of change in this metric suggests that some buyers are willing to continue trying to find a home despite higher prices and mortgage rates. From the first to the second quarter of 2023, the share of prospective buyers actively searching for a home declined in the Northeast (63% to 60%), South (51% to 48%), and West (66% to 58%), but rose in the Midwest (45% to 56%). The combination of slightly softer demand plus increased production by builders is helping some of these engaged buyers find a home in less time. From the first to the second quarter of 2023, the share of active buyers who have spent 3+ months searching for a home eased a bit, going from 71% to 69%. * 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 1st quarter of 2023. See previous post on plans to buy and new vs. existing preferences, and housing availability, and housing affordability. Related ‹ Housing Share of GDP Remains Lower in the Second Quarter of 2023Tags: housing economics, housing trends report

Some Buyers Remain Engaged, Despite Lower Affordability2023-07-31T09:26:16-05:00

Housing Affordability Expectations Slide Back, Again

2023-07-28T09:20:37-05:00

By Rose Quint on July 28, 2023 • After a reprieve in the first quarter of 2023, buyers’ outlook for housing affordability turned bleaker again in the second quarter.  According to the latest Housing Trends Report, 76% of buyers are able to afford less than half the homes for-sale in their markets, up from 73% in the first quarter of 2023. On the flip side, the share able to afford most homes available fell from 27% to 24%.  The shift provides evidence that recent upticks in home prices and mortgage rates are filtering directly into home buyers’ affordability expectations. Affordability expectations between the first and second quarters of 2023 worsened in three regions.  In the Midwest, the share of buyers able to afford less than half the homes available grew from 73% to 81%; in the South from 76% to 79%; and in the West from 66% to 72%.  The only exception was the Northeast, where the share declined from 75% to 69%, i.e., fewer buyers were able to afford only a minority of the inventory available. * 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 2nd quarter of 2023.  See previous post on plans to buy and new vs. existing preferences, and housing availability. Related ‹ GDP Growth Is Stronger Than Expected in the Second QuarterTags: housing affordability, housing economics, housing trends report

Housing Affordability Expectations Slide Back, Again2023-07-28T09:20:37-05:00

GDP Growth Is Stronger Than Expected in the Second Quarter

2023-07-27T10:28:00-05:00

The U.S. economy grew at a solid pace in the second quarter of 2023, fueled by consumer and government spending. The second quarter data from the GDP report suggests that inflation is cooling. The GDP price index rose 2.2% for the second quarter, down from a 4.1% increase in the first quarter. It marks the slowest annual growth rate since the third quarter of 2020. 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 2.6% in the second quarter, down from a 4.1% increase in the first quarter. According to the “advance” estimate  released by the Bureau of Economic Analysis (BEA), real gross domestic product (GDP) increased at an annual rate of 2.4% in the second quarter of 2023, following a 2% gain in the first quarter. This quarter’s growth was above NAHB’s forecast of a 1.4% increase. This quarter’s increase reflected increases in consumer spending, nonresidential fixed investment, government spending, and private inventory investment, partially offset by decreases in exports and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, decreased. Consumer spending rose at an annual rate of 1.6% in the second quarter, reflecting increases in both services and goods. While expenditures on services increased 2.1% at an annual rate, goods spending increased 0.7% at an annual rate, led by gasoline and other energy goods (+13.1%). Meanwhile, federal government spending increased 0.9% in the second quarter, while state and local government spending rose 3.6%, reflecting increases in compensation of state and local government employees and gross investment in structures. Nonresidential fixed investment increased 7.7% in the second quarter, up from a 0.6% increase in the first quarter. The quarter’s increase in nonresidential fixed investment reflected increases in equipment (+10.8%), structures (+9.7%), and intellectual property products (+3.9%). Additionally, residential fixed investment (RFI) decreased 4.2% in the second quarter. This was the ninth consecutive quarter for which RFI subtracted from the headline growth rate for overall GDP. Within residential fixed investment, single-family structures rose 0.8% at an annual rate, multifamily structures rose 1.5% and other structures (specifically brokers’ commissions) decreased 8.9%. Related ‹ More New Homes Improve Expectations of Housing AvailabilityTags: economics, gdp, inflation, macroeconomics, macroeconomy, residential fixed investment

GDP Growth Is Stronger Than Expected in the Second Quarter2023-07-27T10:28:00-05:00
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