Labor Market Improvements Support Economists’ Predictions for Housing Recovery

Employment statistics released earlier in the week by the U.S. Bureau of Labor Statistics (BLS) fall right in line with analysts' recent predictions that the housing market will make a comeback in 2015.

According to the BLS November 2014 Metropolitan Area Employment and Unemployment report, unemployment rates declined year-over-year in 341 out of 372 metro areas in the U.S., while 12 areas reported jobless rates of at least 10 percent and 147 metros posted jobless rates of less than 5 percent.

Reports from economists at CoreLogic and Wells Fargo released in December indicated they believe housing will rebound in 2015 after a disappointing 2014, and they cited improvements in the U.S. labor market as a main reason why. The national unemployment rate in November (not seasonally adjusted) was 5.5 percent, more than a full percentage point lower than the rate reported for November 2013 (6.6 percent). A total of 200 metro areas had an unemployment rate below the national average of 5.5 percent in November, compared to 158 areas with an unemployment rate higher than the national average, according to BLS.

The metro areas with the highest unemployment rates (not seasonally adjusted) in November were Yuma, Arizona (23.1 percent) and El Centro, California (22.6 percent), while the lowest unemployment rates were in Lincoln, Nebraska (2.1 percent) and Fargo, North Dakota and Mankato, Minnesota (2.2 percent each). Forty-four metro areas reported year-over-year decreases of 2 percentage points or more in November, led by Decatur, Illinois (4.3 percentage points), Yuma, Arizona (4.2 percentage points), and Danville, Illinois (4.1 percentage points).

The highest unemployment rate out of the 49 metro areas with a 2000 population census of more than 1 million was in Riverside-San Bernardino-Ontario, California, at 8.0 percent. The lowest rate of those 49 metro areas was in Minneapolis-St. Paul-Bloomington, Minnesota, at 3.0 percent. Out of the 38 metro areas with annual average employment levels above 750,000 in 2013, employment increased in 37 of them. The highest increases occurred in Houston-Sugar Land-Baytown, Texas (4.4 percent) and Orlando-Kissimmee-Sanford, Florida (4.3 percent), while the only decrease occurred in Philadelphia-Camden-Wilmington, Pennsylvania-New Jersey-Delaware-Maryland (0.2 percent).

Payroll employment increased in 313 out of 372 metro areas in the U.S. in November, with the largest increases coming in Houston-Sugar Land-Baytown, Texas (+125,300), Dallas-Fort Worth-Arlington, Texas (+111,500), and New York-Northern New Jersey- Long Island, N.Y.-N.J.-Pa. (+107,900).