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High Unemployment Hasn’t Curbed ‘Robust’ Housing Market

residential segregation in housingZillow's Weekly Market Report shows sellers still steering the housing market. Prices reached a record year-over-year rise and already-low inventory continues to shrink. The report takes into consideration the drop of unemployment claims, and a gain in consumer confidence (which potentially could be boosted with the passage of a revised COVID-19-relief package, progressing through government channels, that includes another stimulus check and a $600 unemployment increase.)

Pending sales have slowed down by 4.6% since last month, though they are up about 22% since the previous year.

"Though the pandemic pushed the buying season back and demand is still high, buyers' scramble for houses seems to be calming somewhat," Zillow reported.

Homes stayed on the market a median of 13 days. This short time has been typical throughout the past two months, Zillow reported. The time on the market a year ago was about 15 days longer.

Inventory has continued to contract for 18 weeks straight. At 35% below 2019 levels, this represents the biggest annual drop in total inventory since Zillow started recording monthly inventory in 2013. It is down 3.2% month over month.

New for-sale listings are down 9.5% year over year and down 6.9% since the previous month.

"In late August, a brief surge of new listings threatened to reach parity with 2019 levels, but that pace dropped off again in September, contributing to the ever-deepening drought of overall active listings," Zillow reported.

Median sale price for the week of August 15 rose 9.3% year over year to $284,625, which is the highest yearly jump in price since at least the start of 2019; Median sale price was up 1.2% month over month. That's less aggressive growth than the previous eight weeks.

Over last year, median list price rose to $345,000 (10.4%), Zillow's highest-recorded year-over-year increase. "However, the only slight monthly uptick of 0.1% could indicate that an overdue seasonal cooling of the market may finally be setting in," Zillow reported.

After two months of decline, the Conference Board's Consumer Confidence Index jumped 15.5 points from August to September. That, Zillow reported, "is the strongest month-over-month gain since April 2003." (Overall confidence is still 23% below February levels).

New unemployment claims fell by 36,000 last week but remained elevated at between 800,000 and 900,000 for the fifth straight week.

"Those collecting unemployment insurance through regular state programs fell by 980,000 to 11.8 million," Zillow reported, "which is the lowest level seen since March, but still far above the 1.7 million on unemployment at this time last year."

Fannie Mae's Chief Economist Doug Duncan pointed out how jobs impact not only the market in general but also the inventory issue. "Residential construction employment (including specialty trade contractors) posted another large increase this month, with job gains of 22,000, a welcome sign for a sector dealing with supply constraints."

Commenting on the jobs report, First American Deputy Chief Economist Odeta Kushi said that the "long-term economic scarring from workers dropping out of the labor force" is more concerning than the headline unemployment rate.

"A lower labor force participation rate tends to go hand-in-hand with slower wage growth," she said. “For the housing market, slower wage growth could chip away at house-buying power, while the ongoing supply shortage continues to put upward pressure on house price appreciation, with repercussions for affordability.”

Realtor.com's Senior Economist, George Ratiu said he expects low mortgage rates to "keep demand robust as many buyers who still have their jobs are on the hunt."

"However," he added, "with real estate price growth more than doubling wage growth, many buyers will struggle with affordability."

The full market report, through September 26, is available on Zillow.com.

The job report from the Bureau of Labor Statistics is here.

About Author: Christina Hughes Babb

Christina Hughes Babb is a reporter for DS News and MReport. A graduate of Southern Methodist University, she has been a reporter, editor, and publisher in the Dallas area for more than 15 years. During her 10 years at Advocate Media and Dallas Magazine, she published thousands of articles covering local politics, real estate, development, crime, the arts, entertainment, and human interest, among other topics. She has won two national Mayborn School of Journalism Ten Spurs awards for nonfiction, and has penned pieces for Texas Monthly, Salon.com, Dallas Observer, Edible, and the Dallas Morning News, among others.
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