Increased home sales continue to help the United States out of its Great Recession, but uneven job growth is stunting recovery, according to ""Freddie Mac's"":http://www.freddiemac.com/ U.S. Economic and Housing Market Outlook for July.[IMAGE]
The report, released Wednesday, showed that record-breaking low mortgage rates and refinances through HARP 2.0 drove up housing demand, leading to increases in housing starts, home sales, and prices in many markets.
Housing starts for the first five months of the year averaged an annual rate of 719,000, a 26 percent increase from the same period in 2011. New home sales jumped up 17 percent while existing home sales increased 7 percent. In addition, HARP refinances in the through May this year exceeded 78,000, more than the total of HARP refinances during all of 2011.
However, flagging job growth was a major issue. The latest labor market reports show that job creation slowed in the second quarter, with a total of 225,000 new payroll jobs being reported-the lowest quarterly gain in nearly two years and a disappointment compared to the first quarter's 677,000 job boost.[COLUMN_BREAK]
Residential building construction lost 6,000 jobs in June, while employment in construction and mortgage finance continues to fall behind growth in other sectors. Over the past year, overall payroll employment across all industries was up 1.8 million, with construction making up a mere 13,000 of that total.
However, housing demand has boosted hiring in the construction sector on a year-over-year basis, but although the unemployment rate for construction workers has fallen since June 2011, it remains elevated compared to the overall national figure.
The report attribute's labor market weakness to the mild winter, which shifted economic activity from the spring back to the beginning of the year. Over the first half of 2012, employment gains have averaged 150,000 per month.
Strengthening of economic growth in the second half of the year is expected to rebuild job growth back to this monthly pace.
Although job growth proved underwhelming in the second quarter, the report pointed out that the economy may see better days ahead, owing largely to falling mortgage rates. With lower monthly mortgage interest payments, homeowners have more funds left over to support consumer spending or savings, providing a boost to the country's GDP and supporting a pick-up in labor force growth.
Freddie Mac VP and chief economist Frank Nothaft said the housing market's recovery should be used as a foothold to boost the struggling sectors.
""While housing may not have played its traditional role coming out of the Great Recession, at the end of the day, it has turned a very large corner, and now it's time to get this sector back to work whether through construction jobs, remodeling, or home brokerage,"" said Nothaft.