More Jobs, More Homes

Employment exceeded expectations in February, with total nonfarm payrolls increasing by 273,000, as well as an average growth of 243,000 over the last three months. Doug Duncan, Chief Economist, Fannie Mae, noted how employment in the residential construction sector has grown.

“Manufacturing employment rose this month, reversing much of its recent decline, easing some recent concerns about weakness in this sector,” Duncan said in a statement. “In the household survey, the unemployment rate ticked back down to historically low levels, and labor force participation held constant. Furthermore, residential construction (including specialty trade contractors) posted another large gain this month, a welcome sign in terms of expected easing of housing supply constraints.”

Duncan also discussed the coronavirus threat and its potential impact, noting that February’s report may be too early to see any change.

“Due to the timing of data collection in this month’s report, it is unsurprising that there was no observed impact from recent coronavirus news,” he said. “We also do not expect to see much of an effect in next month’s report given the time and expense required for firms to consider staffing decisions.”

With unemployment at record lows, First American Deputy Chief Economist Odeta Kushi stated that economic growth will continue, and homebuilders are benefitting from a mild winter.

“The growth in residential construction jobs supports further improvement in the pace of home building because building a home does not readily lend itself to outsourcing and automation,” Kushi said. “It’s very hard to increase housing starts without increasing residential construction employment and productivity.”

According to Redfin Chief economist Danielle Hale, increased earnings alongside recent Fed rate cuts will likely boost home buyer confidence and purchasing power.

“Strong buyer interest so-far is keeping a lid on the level of homes available for sale; buyers are quick to pounce on well-priced homes,” Hale said. “Buyer demand helped spark a good start to building in 2020, with housing permits, starts and completions all up, but more is still needed. The 42,000 construction jobs added in February are a step in the right direction."