Economists' Outlook

Housing stats and analysis from NAR's research experts.

Strong Employment Growth Continues to Underpin Homebuyer Demand in April 2018

In a monthly survey of REALTORS®, respondents are asked “Compared to the same month last year, how would you rate the past month's traffic in neighborhood(s) or area(s) where you make most of your sales?” Respondents rate buyer traffic as “Stronger” (100), “Stable” (50), or “Weaker” (0) and the responses are compiled into a diffusion index. An index greater than 50 means that more respondents reported “stronger” than “weaker” conditions.

The chart below shows buyer traffic conditions in February–April 2018 compared to conditions one year ago, according to the  April 2018 REALTORS® Confidence Index SurveyREALTORS® reported that buyer conditions were “stable” to “very strong” compared to conditions one year ago, except in Alaska.[1]

Strong employment growth has bolstered housing demand, with the unemployment rate falling to 3.8 percent in May 2018, the same rate in April 2000 and just a tad higher than in October 1969 (3.7 percent).  Construction of new residential housing has not kept pace with job and household growth. Compared to employment During the 12-month period of June 2017-May 2018, 1.8 million payroll jobs were generated, with unemployment rate falling to 3.8 percent However, housing starts have averaged at 1.2 million (annualized basis), which means a housing deficit of at least 600,000 units.

The main employment generators were professional/business services, education and health, construction, leisure/hospitality, and manufacturing, all of which generated at least 200,000 jobs in the past 12 months. Only information services (includes newspaper publishing) lost jobs (-19,000).

Housing demand is strong where employment is also growing robustly.  In April 2018, the states with the highest percent change in employment from one year ago were Utah (3.4%), Nevada (3.2%), Idaho (3.1%), Texas (2.9%), Washington (2.8%), Colorado (2.6%), Arizona (2.3%), California (2.2%), and Florida (2.1%). Nationally, payroll employment rose 1.6 percent in April 2018 from one year ago.


[1] In generating the indices, NAR uses data for the last three surveys to have close to 30 observations. Small states such as AK, ND, SD, MT, VT, WY, WV, DE, and D.C., may have fewer than 30 observations. For graphical purposes, index values from 25.01 to 45 are labeled “Weak,” values of 45.01 to 55 are labeled “Stable,” values of 55.01 to 75 are labeled “Strong,” and values greater than 75 are labeled “Very Strong.”