The housing market has been soaring despite the subdued job market due to the record low mortgage rates. However, the rates will not fall further, so the jobs recovery becomes even more important to sustain homebuying. Jobs are also critical for commercial real estate.
In November, the economy added 245,000 jobs, the slowest monthly addition since the reopening of the economy in May. Also, from May to November, 12.3 million jobs have been added but that still leaves us with another 9.8 million jobs needed to get us back to pre-pandemic employment levels. Job additions have to pick up significantly or it will take another three years to get us back to normal, not even accounting for all the new college graduates who will be searching for jobs during this time. The decline in the unemployment rate to 6.7% should be discounted, since the labor force participation rate declined. Fewer people looking for work is not a good sign.
The construction sector added only 27,000 new jobs in November – a bit light considering we need a greater supply of new homes. Therefore, the tight housing inventory situation is likely to be with us for a while.