3 Great Things (And 1 Troubling Thing) For Housing in the New Jobs Report

by Peter Thomas Ricci

The news was ALMOST uniformly good for the housing market in the latest government jobs report.


The economy ended 2014 in a most delightful fashion, with the government releasing a very positive jobs report for December.

How does such good news relate to the housing market? Below, we’ve compiled three of the most encouraging stats in the report, as it pertains to housing, along with a troubling trend that the economy cannot seem to overcome.

The 3 Great Signs

•Party Like It’s 1999 – The economy added 252,000 jobs in December, bringing 2014’s monthly average to 246,000 added jobs a month. That’s not only the best average since 1999, but additionally, the 2.9 million jobs that 2014 added is the best 12-month stretch since 2000.

•Residential Construction Boon – The news was particularly good for residential construction, which added 13,500 jobs from November to December and 33,400 jobs for the last three months of 2014. By year-over-year measures, residential construction jobs re now up 6 percent (versus the overall job growth of 2.1 percent).

•Millennial Improvements – After several months of lackluster numbers, the employment rate finally improved for Millennials, with 76.4 percent reporting they had jobs; that’s up from 75.5 percent in Dec. 2013, and is the highest level since the end of 2008. One thing we should note – normal Millennial employment is in the 78 to 80 percent range, so we’ve still some ground to cover.

The 1 Troubling Sign

•Wages Still Lagging – And speaking of ground to cover, the new jobs report has offered yet another sign that wages remain weak, even as labor force participation falls. In December, private-sector employees saw their hourly wages rise just 1.7 percent; that’s not only below the historic trend of 2 percent, but also represents the weakest yearly wage growth since late 2012.

We write about income and wages fairly often, and for good reason – until wages recover, it’s unlikely that the housing market can truly recovery. Doug Duncan, the chief economist at Fannie Mae, put it best in his comments on the jobs report: “Meaningful income growth needs to occur to spur household formation, which has been frustratingly anemic in the current economic expansion,” he said. “That dependence on income growth acceleration means the economy should drag housing upward, rather than housing being a leader in growth acceleration.”

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