August 07, 2019
How February’s Low Jobs Report Affected the Housing Market
February 2019 saw a somewhat alarming decrease in the number of new jobs added to the economy—a mere 20,000, which is basically a pittance compared to the 181,000 economists had expected—according to a report released in March by the Bureau of Labor Statistics. While the unemployment rate fell from 4 percent to 3.8 percent, that 20,000 was still a disappointing figure. Things have since improved, but when people read news like this it is natural to wonder what effect this might have on the housing market. So what did we see happen as a result? Does this mean fewer homes were sold?
Well, there are other aspects to consider. For one thing, some of those jobs that failed to be added were in construction. February saw the arrival of more above-average snowfall in a greater number of locales than usual, which served to offset January’s 53,000 jobs added, which came as a result of an abnormally mild climate nationwide during that month. This abrupt weather change, therefore, saw construction employment decline by 31,000. Despite a total of 223,000 construction jobs having been added for the year by early March, that was still a sector that directly affected the housing market, given the general slowness of construction building to match housing demand over the past couple of years. Consider that mortgage rates fell in January, which naturally resulted in more contracts signed to own homes, and what we saw was more demand in February—and a slight increase in competition overpricing due to a decrease in the number of new homes built.
Moreover, wages gained 3.4 percent year-over-year, so the lack of jobs added did not cause any drop in the housing market.
And since February’s weather-related slowdown was only temporary—and conditions have since improved—so have the conditions for housing construction. There was, in other words, no weakness caused in the housing industry.
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