Nonfarm payroll employment climbed 661,000 in September, which drove the unemployment rate down to 7.9 percent, according to Friday’s jobs report from the Bureau of Labor Statistics.
The report reflects a dip in prime-age labor market participation, which could be a future concern for the health of the housing market, according to Odeta Kushi, the deputy first economist at First American. A dip in prime-age participation usually goes hand-in-hand with slower wage growth.
“If one of the 3 main tenents of house-buying power — household income — falls behind, against a backdrop of limited inventory of homes, we can expect affordability to fall,” Kushi said, on Twitter.
Mike Fratantoni, the senior vice president and chief economist at the Mortgage Bankers Association, believes job growth is going to be more difficult in the coming months, with more businesses struggling to stay afloat. That could also ultimately impact the housing market, in the long term.
“For the housing market, record-low mortgage rates and an improving job market should support strong demand for the rest of the year,” Fratantoni said. “However, further slowdowns in hiring could cause some households to delay decisions to buy.”
The number of new jobs added missed expectations, as estimates were that approximately 860,000 new jobs would be created. Core unemployment — which excludes those on furlough or temporary layoff – hit the highest mark since the pandemic started at 6.1 percent, according to Jed Kolko, the chief economist at recruiting website Indeed.
Core unemployment rose even as the headline rate fell. That’s because temporary layoffs went down while permanent unemployment rose 10%. The core unemployment rate remains much lower than at the worst of the Great Recession but is still climbing.
— Jed Kolko (@JedKolko) October 2, 2020
The real estate sector of the labor force — including rental and leasing — added 20,000 new jobs from August to September, according to the report. There are 140,000 fewer individuals employed in the sector than in September 2019.