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Housing, Economy Turning Corner Amidst COVID-19

The U.S. economy added 2.5 million jobs in May and the unemployment rate declined to 13.3% from the prior report’s 14.7%, according to the Bureau of Labor Statistics. 

Also, the number of unemployed people fell by 2.1 million to 21 million. 

The unemployment rates decline in May for adult men to 11.6%, adult women (13.9%), Whites (12.4%), African Americans (16.8%), and Hispanics (17.6%). 

Construction employment rose by 464,000 in May—gaining back almost half of April’s decline (-995,000). Much of this gain was attributed to specialty trade contractors, with the increase split between the residential and nonresidential components. 

Realtor.com’s Chief Economist Danielle Hale said the share of works who expect to return to work within six months remains higher than normal, but “that’s one of the few bright spots in an otherwise dismal report.” 

“Even workers expecting only a short disruption in income likely cut back on spending and dipped into savings to make ends meet. Unemployment benefits, which are currently more generous than usual, will help, but major purchases such as cars and homes may be delayed for some buyers until they feel like the jobs market is back to normal,” Hale said. “The longer the disruption in the labor market, the longer consumers may have to wait on making major purchases such as cars and homes.”

First American’s Deputy Chief Economist Odeta Kushi said that the housing market was directly hit in last month’s jobs report, as residential construction jobs fell to their lowest level since 2016, but have turned the corner in May. She said residential construction increased by 9.2% in May—just 3.6% below May 2019’s data. 

“The housing market is helping the economy in recovering from the recession—a role it has traditionally played in previous economic recoveries,” she said. “Homebuilder confidence increased in May after April’s record-breaking decline, as builders responded to low mortgage rates and a continued rise in purchase applications, signs home buyers are back in the market to buy.”

Kushi added that in April, pandemic-related pressure drove the supply of homes for sales to its lowest April levels ever recorded. 

Even in the years prior to the pandemic, the lack of housing supply for sale was a significant headwind to the housing market. Today’s report is not only a signal that the broader labor market has started to rebound but a bright spot for a housing market in desperate need of more supply. More hammers, more homes,” she said. 

Robert Dietz, Chief Economist for the National Association of Homebuilders (NAHB) said on Twitter that in May, home builders and remodelers added 226,000 jobs as housing data recovers. 

“Measured against a year ago, home builder and remodeler employment are lower by just 148,400 in May after a revised 422,200 job April loss for the sector,” Dietz said. “This is a strikingly strong turnaround, although the sector employment count remains lower.”

 

About Author: Mike Albanese

Mike Albanese is a reporter for DS News and MReport. He is a University of Alabama graduate with a degree in journalism and a minor in communications. He has worked for publications—both print and online—covering numerous beats. A Connecticut native, Albanese currently resides in Lewisville.
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