Jobs continue to be added to the economy, but the momentum is less strong than before. Even so, the latest monthly addition of 142,000 is not shabby and brings the 12-month total to an impressive 2.75 million net new jobs.
Both residential and commercial real estate markets have been improving principally because of jobs. One can see the differences in the recovery pace between states with fast job creation (e.g., Utah and Florida) versus states with slow or no job creations (e.g., West Virginia and North Dakota). Given that jobs are being added at a respectable pace, the real estate markets should continue to improve.
The lost in momentum can be seen in the 12-month job change. The pace had been 3 million or so from late last year to the early summer months of this year. Now, rather than 3 million, it is 2.75 million net new jobs.
No mystery that the collapse in the oil price has forced job cuts in the oil extraction. The low oil prices, however, are helping consumers save extra money to spend elsewhere. Retail spending and auto sales have been solidly positive.
It is a big mystery that jobs in home building are not being added more aggressively. There is a housing shortage in many local markets, yet builders have been complaining of the difficulty of finding qualified construction workers, even though the pay is well over the minimum wage.
No government shutdown for now, but could happen in December. As part of uncongenial debates, shouting, and bluffs, a sequestration came into effect a few years ago, resulting in a steady decline in government workers and military personnel. Those sequestration impacts are all but over now and new people are being hired. One thing people should know is if there is to be a government shutdown in December, it will be when a new budget needs to get passed. After the shutdown all government employees get paid retroactively. Employees, in essence, have joked that government shutdown is nothing more than a paid vacation time while the rest of America suffers inconvenience of not having this or that service.
Lawrence Yun is Chief Economist and Senior Vice President of Research at NAR. He directs research activity for the association and regularly provides commentary on real estate market trends for its 1 million REALTOR® members.