Building Homes Are Creating More Jobs
The latest employment report for November, released today, indicates an increase of 199,000 workers added to payrolls by companies. This represents a slight improvement from October’s payroll figures but falls below the 240,000 monthly average observed over the preceding 12 months. Unemployment saw a marginal decrease to 3.7%, suggesting a reduced proportion of individuals actively seeking employment in the labor force. While sectors like healthcare and government experienced job growth, the retail industry witnessed a decline in payroll numbers. Additionally, there was minimal change in industries such as construction and professional and business services. The conclusion of recent labor strikes contributed to an upswing in manufacturing payrolls.
According to Realtors, Today’s report along with next week’s inflation data will be a key input in the Fed’s assessment of the economy and appropriate monetary policy at its December meeting. Following its November meeting, Chair Powell noted that Fed decision makers were looking to gain confidence that current policy is sufficiently restrictive, and that key question is likely to frame discussion in next week’s meeting. Today’s job market data is likely neutral, potentially bolstering the importance of next week’s inflation reading. The November jobs report is too strong to augment the case that the committee has done enough, but it’s not so strong that it alone justifies another rate hike.
In October, job openings fell to 8.7 million from a downwardly revised 9.4 million in September. The openings rate also dropped, to 5.3%, coming ever closer to pre-pandemic highs around 4.8%, down notably from its 7.4% peak in March 2022. Job quits were roughly steady at 367 million or 2.3%, levels and rates that are elevated compared to pre-pandemic readings, but below the surge in quits seen since the beginning of 2021 that was often dubbed the ‘Great Resignation.’ The job openings and labor turnover data (JOLTS) suggest that while companies are down-sizing the number of positions they are hoping to fill, workers are still able to move to different, presumably better, positions with relative ease.
Average hourly earnings for private employees rose by 4.0% in the last year, on par with last month’s reading, and nearing the upper end of its pre-pandemic range that was consistent with price stability. Earnings are now outpacing inflation, bringing real growth to workers’ spending power. Nevertheless, the cost of purchasing the typical for-sale home continued to outpace wage growth, rising 7.9% in November. Fortunately for homebuyers, Realtor.com’s 2024 Housing Forecast anticipates the beginning of a turnaround in housing affordability. Easing mortgage rates, which have declined more than three-quarters of a point from recent highs, are expected to continue lower, working alongside rising incomes to boost homebuyer purchasing power. Gains in new single-family construction and completion of multi-family rental homes are likely to provide households options when looking for a home in 2024 that will help sap the recent upward momentum in home prices. An anticipated decline in existing home prices will further improve affordability for home shoppers in 2024.
