US employment gains will push demand for starter homes

The US added 196,000 jobs in March, which will add to the pent up demand for housing, according to NAR's chief economist

The unemployment rate remained static at 3.8 percent and total employment increased by 196,000 in March, according to the latest data from the U.S. Bureau of Labor Statistics.

Wages were up slightly, according to the report, with the average hourly earnings for all employees up by $0.4. Over the past 12 months, average hourly earnings have risen 3.2 percent.

“The 196,000 jobs added to the U.S. economy in March reversed the slowdown in February, but more importantly, it showed that job creation overall remains robust,” Joel Kan, the associate vice president of economic and industry forecasting said in a statement. “The unemployment rate stayed at 3.8 percent and is still well below historical averages. The 3.2 percent growth in hourly earnings is good news for the housing market, as wage growth continues to more closely align with home-price gains.”

The jobs report is good news for a housing market that has sputtered in recent months, National Association of Realtors Chief Economist Lawrence Yun said.

“The job market is quite remarkable as more job creations and wage gains are adding to the pent-up demand for housing,” Yun said in a statement.

With that demand comes a lack of supply at the lower end of the market, which may be an issue as the construction industry still hasn’t bounced back to prior peaks.

“The many new job holders are seeking the starter home, but unfortunately, there is a grossly inadequate supply of moderately priced homes,” Yun said.

A total of 16,000 new construction jobs were added in March, bringing the 12 month total to 246,000, which Yun called a, “welcoming trend.”

“However, given the housing shortage, more workers are needed for homebuilding,” Yun said. “There are around 300,000 job openings in the construction sector that are yet to be filled. Only from increased home construction will the housing market advance in a healthy way of home prices not rising faster than wage gains.”

Kan called the gain in construction jobs, “decent,” in a statement.

“These developments, along with lower mortgage rates and easing price growth, lay the foundation for steady housing demand as we move further into the spring homebuying season,” Kan said.

There were 2.27 million real estate and rental and leasing jobs in March, a month-over-month increase of 13,000, or 4 percent, and a year-over-year increase of 68,000.

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