Economists' Outlook

Housing stats and analysis from NAR's research experts.

Instant Reaction: Jobs, February 4, 2022

There is both good and bad news as the strengthening labor market pushes up interest rates. Nearly half a million net new payroll jobs were added in January; that figure is over a million if we include independent self-employed business owners. Such gains also mean that the Federal Reserve will stick to—or even accelerate—its plan to raise interest rates. Inflation has been running at a 40-year high, and strong job gains along with rising wages will not tame price pressures. That is why the 10-year Treasury bond yield is at the highest rate since the onset of the pandemic at 1.9%. Mortgage rates will follow this upward path as well.

More residential construction and industry trade contractor jobs were added and are now far ahead of the numbers seen before the pandemic, implying more homebuilding and more supply are forthcoming. Commercial real estate construction jobs are still down even though in-office jobs such as accounting, legal service, and management consultancy jobs, are all reaching new record highs. The work-from-home trend evidently remains strong.

What can we expect? Apartment rents look to accelerate as many new workers seek their own housing. Homebuying demand, however, will be mixed: more jobs help, but higher mortgage rates hinder the decision to buy.