More Hiring and More Houses a Win for Housing Market

More Construction Jobs, More Homes, Healthier Housing Market

by
Updated on October 6th, 2020
housing market construction
Photo credit: Garreth Wilcock via Visual hunt / CC BY-SA

The economy added 292,000 jobs in December, more than anyone predicted, pushing 2015 into a robust year for employment growth. Builders in particular reported a spurt of hiring, a good sign for housing.

The good news

We’ve had two really strong back-to-back years for job creation. Wages are up 2.5 percent from a year ago, and more people joined the labor force in December, according to today’s report from the Labor Department. The economy is on solid footing.
Housing is playing a starring role. Builders added 45,000 jobs in December after a 48,000 increase in November and construction workers put in longer hours last month.
“Warm weather drove construction employment higher for the third month in a row in December,” Redfin chief economist Nela Richardson said. “This was a boon to the huge increase in jobs overall and it bodes well for housing starts in the first quarter. The lack of workers has been a big impediment to new construction.”

housing market
Source: Bureau of Labor Statistics; Census Bureau

The rest of the news

All those new construction jobs might have something to do with warm weather in much of the country and could be short lived. And wage growth is still slow compared to other economic recoveries, which doesn’t help the housing market.
And the surprising jump in employment suggests the Fed might move more quickly to raise interest rates than we first thought. While the central bank doesn’t control mortgages, we can expect home loans to get more expensive this year as the economy improves.
“Markets are desperate for good news, and now have it, but it comes with a caveat because better employment growth means the Fed will raise rates faster,” said Beth Ann Bovino, U.S. chief economist at Standard & Poor’s Ratings Services.
As of this morning, analysts and economists say there’s about a 40 percent chance the Fed will raise interest rates at their March meeting.

The upshot

Builders slowly are coming out of their funk, which eventually will help homebuyers frustrated with a lack of choice. Mortgage rates will rise this year, and we’d still like to see paychecks get bigger, faster.

Avatar

Lorraine Woellert

Lorraine is enjoying her first real job after a career in journalism. She’s based in Washington, D.C., where she writes about housing and the economy. Before joining Redfin, Lorraine was at Bloomberg News reporting on politics, financial mayhem, housing and the economy. Her dream home is a top-floor loft with a pool, friendly neighbors and a terrace for throwing parties. Everyone's invited. Redfin is a full-service real estate brokerage that uses modern technology to make clients smarter and faster. For more information about working with a Redfin real estate agent to buy or sell a home, visit our "Why Redfin?," page.

Email Lorraine

Leave a Comment

Your email address will not be published. Required fields are marked *

Be the first to see the latest real estate news:

  • This field is for validation purposes and should be left unchanged.

By submitting your email you agree to Redfin’s Terms of Use and Privacy Policy

Scroll to Top