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Source: NAHB

It is hoped that job growth will help the housing industry this year and a stellar January jobs report only bolstered that expectation. However, a cause for concern is that many of America’s fastest growing careers (in terms of numbers of workers) have average or below average homeownership rates. Professions with homeownership rates above the national average, like engineers, lawyers, doctors, and computer and math professionals, are seeing only average job growth.

Making sense of the story

  • Some experts suggest that acceleration in job growth, along with an ongoing expansion of consumer confidence, will help support housing demand and residential construction during 2015.
  • The Bureau of Labor Statistics (BLS) reported that payroll employment expanded by 257,000 in January, with an additional 147,000 jobs reported in November and December after data revisions. The unemployment rate inched up to 5.7 percent in January from 5.6 percent in December, which is in fact, a positive development as this change was due to more individuals seeking work.
  • A separate BLS survey of job openings and turnover suggests additional hiring ahead. For the overall economy, the job opening rate (number of unfilled jobs as a percent of total employment) reached 3.5 percent in December, the highest rate for the post-recession period.
  • In December, total private residential construction spending increased 0.3 percent, driven by a large increase in the single-family component of private residential construction. Single-family spending increased 1.2 percent over the revised November estimate, while multifamily spending increased 0.3 percent.
    One of the factors holding back housing demand (rental and owner-occupied) has been weak household formation, particularly among young adults. New research by BLS economists found that for those born between 1980 and 1984, 90 percent moved out of their parents’ household by age 27. Of those moving out, however, over 50 percent returned.
  • This lack of robust household formation, combined with weakness in existing home inventory, has placed a ceiling on growth for the home resale market.
  • In contrast, the 55+ market continues to do well. NAHB’s 55+ Housing Market Index was higher year over year for all segments of the senior market—single-family homes, condominiums, and multifamily rental. The single-family index increased six points from the fourth quarter of 2013, to 54—the highest fourth-quarter reading since the inception of the index in 2008.

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