Economists' Outlook

Housing stats and analysis from NAR's research experts.

Instant Reaction: Jobs, April 1, 2022

“Is the economy on the verge of overheating, which would then require the Federal Reserve to be even more aggressive to tame rapidly rising inflation? The latest jobs data, with the unemployment rate sinking to 3.6%, presents an incredibly tight job market. A net gain of 431,000 new jobs was added in March, bringing the total jobs recovery to 19 million since the lockdown two years ago. Another 1.5 million jobs are needed to match the prior peak observed before the ugly arrival of the pandemic. There are currently in essence two job openings for each unemployed person. That is why wages are rising by a hefty 6.8%. Workers are not better off, however, as inflation is running even higher at 7.9%.

Job gains are good, of course, but rising wages and prices are raising the prospect of potential stagflation – similar to economic conditions in the 1970s. The bond yields are touching 3-year highs in anticipation of aggressive rate hikes by the Fed. Mortgage rates consequently will also move higher. Recall they were 3% last year. Rates are now on the verge of touching 5%. For first-time home buyers, the costs of buying the same home this year compared to just one year ago have risen by 40% from a combined impact of higher home prices and much higher mortgage rates. There will be an inevitable slowdown in home sales. Keep an eye on days-on-market and a decrease in multiple offers. Home sellers should not expect big easy profit gains.”