Overall, Trulia reports that the monthly jobs numbers and housing are fairly solid, but there is a crack in the foundation that could hinder the long term recovery of housing: unemployment in young American adults.
Monthly, they look at three measures in the monthly jobs report to see whether housing is helping jobs and whether jobs are helping housing:
- Residential construction employment, which shows whether housing is helping jobs.
- Job growth for young adults (key age group for household formation), and
- Job growth in “clobbered metros” (those hit hardest in the housing bust), to show whether jobs are helping housing.
Trulia notes that the April jobs report came back with solid construction-job growth nationally, as well as a continued jobs recovery in “clobbered metros,” but young adult employment is slipping.
Residential construction employment
“Residential construction employment, including residential specialty trade contractors, increased by 13.1 thousand in April versus one month earlier, and by 29.5 thousand versus three months earlier,” notes Dr. Jed Kolko, Trulia’s Chief Economist.
Dr. Kolko added, “That’s steady growth: residential constrution jobs are up 5.0 percent year-over-year, ahead of overall job growth of 1.7 percent. Why is construction employment still growing even though new-home starts fell 6 percent year-over-year in March? Because employment is more closely tied to the number of units under construction, which were up 21 percent year-over-year in March. Single-family homes are typically under construction for several months, and multi-unit buildings are typically under construction for a little over a year.”
Young adult employment
In April, young-adult employment “stumbled,” Dr. Kolko stated. Employment among 25-34 year-olds, the prime age group for housing demand, was at 75.5 percent in April, after three months at 75.9-76.0 percent. “But it’s too soon to tell whether this downturn is a blip or a trend,” Dr. Kolko opines, still referring to it as a “red flag.”
Prior to the bubble, young adult employment hovered around 78 to 80 percent, but is not yet even halfway back to normal.
“Having a job matters for housing. Just 12 percent of employed 25-34 year-olds live with their parents, versus 20 percent of 25-34 year-olds without jobs,” Dr. Kolko added.
Job growth in “clobbered metros”
In “clobbered metros,” job growth was 2.2 percent in March compared to the same week in 2013, which has outpaced national job growth which is only 1.7 percent during the same period.
Among clobbered metros, Las Vegas (+3.6%), Fort Lauderdale (+3.3%), Orlando (+3.1%), and Miami (+3.1%) had especially strong year-over-year job growth, while Detroit (-0.9%) continued to lose jobs.
“Job growth in clobbered metros has outpaced overall U.S. job growth since mid-2011,” Dr. Kolko said. “Year-over-year job growth in clobbered metros ran ahead of the U.S. overall until the bubble burst, then lagged the U.S. overall during the bust and recession. Employment in clobbered metros has increased 11% cumulatively from before the bubble (January 2000) to now (March 2014), compared with 5% for the U.S. overall.”