Housing and the July jobs report

The close relationship between jobs and housing

According to the U.S. Labor Department, hiring in America is up, yet unemployment rose anyhow. Dr. Jed Kolko, Chief Economist at Trulia said the jobs report was “solid for housing demand,” but reiterated that housing is “still clearly not leading the recovery.”

The mixed economic signals also present a good news and bad news scenario for housing. Although housing is not leading the jobs recovery, Dr. Kolko notes that “25-34 year-olds – prime age for housing demand – are doing much better in the job market than a year ago, and job growth held up in ‘clobbered metros’ that suffered the worst of the housing bust.”

Dr. Kolko adds that construction continues to stagnate, as the economy has added 1.8 million jobs, but only 5,000 construction jobs, with construction employment down 2.1 percent versus three months ago, compared with overall employment rising 0.9 percent during the same period.

Job growth in “clobbered metros” was 0.8 percent in June, while the national average was 0.7 percent during the same period. Dr. Kolko says they define clobbered metros as the areas with the biggest price declines during the bust and the highest vacancy rates, adding that “job growth there is especially important for housing demand.”

Uncovering a statistical gem

Trulia reports that among the 100 largest metros, job growth was strongest year-over-year (through June, latest available) in San Jose, San Francisco, Houston, and Raleigh NC. Quarter-over-quarter (through June), job growth was strongest in Springfield MA, Austin, San Jose, and San Francisco.

Additionally, the economist notes that among 25-34 year-olds, the prime age group for housing demand, 74.5% were employed in July, well up from 73.2% one year ago; their unemployment rate dropped to 8.2% from 9.7% one year ago. The job market has improved a lot in the past year for this prime age group for housing demand.