Tags: Jobs | housing | weakness | labor

Dismal Jobs Data May Fuel More Weakness in Housing

Friday, 01 June 2012 02:59 PM

The dismal May jobs report may signal more than just bad news for the unemployed, it may mean housing is facing headwinds as well.

In May, the U.S. economy added a net 69,000 nonfarm payrolls, according to the Bureau of Labor Statistics, far less than expectations of around 150,000 jobs.

However, the construction sector lost 28,000 jobs last month, which would suggest housing starts are set to fall in the coming months.

Editor's Note: I Wish I Were Wrong — Economist Laments Being Right. See Interview.

"The May 2012 jobs report was a step backward for housing in every way," says Jed Kolko of Trulia.com, a residential real estate site.

Many metropolitan areas with the biggest home price declines during the housing bust now face the highest vacancy rates and need as many jobs as possible.

"The recent trend is reminiscent of the monthly patterns of the spring slowdown witnessed over the last two years that continued through the summer months. If this pattern recurs, we expect that hopes for a meaningful housing recovery will be delayed once again,” says Fannie Mae’s chief economist Doug Duncan, CNBC adds.

The housing sector has shown some signs of life but remains far from robust recovery.

Existing home sales rose 3.4 percent in April from March and were 10 percent higher than in April 2011, the National Association of Realtors, prompting experts to believe the sector is hitting bottom.

"You have to hit bottom before you can start rising and that has happened in the housing market," says Joel Naroff of Naroff Economic Advisors, according to the AFP.

By its nature, however, the housing sector should bump along a bottom before showing marked improvement, and the verdict is out as to when home prices will hit their pre-recession highs.

"I worry that we might not see a really major turnaround in our lifetimes," says Yale economist Robert Shiller, architect of the Case-Shiller/S&P Home Price Index, according to Reuters.

Editor's Note: I Wish I Were Wrong — Economist Laments Being Right. See Interview.

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Friday, 01 June 2012 02:59 PM
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