Although December’s job report numbers disappointed experts’ expectations, many explained that the end-of-year increase in construction jobs is just what the housing market needed.
This number is far below experts’ expectations for December. Experts predicted the month would show an increase of 190,000, 210,000 or even 250,000.
“The December jobs report was modestly positive, as employment gains were below expectations but still strong enough to keep the unemployment rate steady,” said Curt Long, National Association of Federally Insured Credit Unions chief economist.
“Wage growth remains low, but did tick up slightly to 2.5%,” Long said. “Overall, the job market performed well in 2017 and is a key reason why the economy is poised for its best year since the crisis in 2018.”
And despite the lower-than-expected overall numbers, experts were still optimistic due to the 30,000 increase in construction jobs.
“December’s increase in construction labor is a hopeful reminder that things will eventually get better for our severely depleted housing market,” realtor.com Senior Economist Joseph Kirchner said. “In fact, if this trend gains momentum, it could address one of the largest issues holding back inventory – a lack of construction labor.”
“Let’s hope it does, because the report also shows no end in sight for the insatiable demand we’re seeing in the market,” Kirchner said. “Jobs drive housing demand and with the unemployment rate remaining at its lowest level of the millennium, it’s only going to pick up.”
Another expert agreed, saying the increase in construction jobs was the one bright spot in Friday’s employment report.
“One bright spot we saw in the report is the biggest monthly rise in residential construction employment in 2017, raising hopes for some supply relief for housing this year,” Fannie Mae Chief Economist Doug Duncan said.
One expert explained this increase marked the highest point in construction jobs in seven years.
“Residential construction jobs rose to the highest since 2008 as builders work to add supply given the tight inventory and rising home prices,” LendingTree Chief Economist Tendayi Kapfidze said. “Construction employment increased by 210,000 in 2017, compared with a gain of 155,000 in 2016.”
And while one expert said it’s important not to read too much into economic activity in December, the construction jobs increase, she said, is worth highlighting.
“It’s important not to read too much into a year-end job report as there typically isn’t much economic activity in December,” Redfin Chief Economist Nela Richardson said. “However, the late-year surge in construction jobs is worth highlighting.”
“Construction jobs increased by 30,000 last month, ending 2017 with a total of 35% more jobs added than in the year before,” Richardson said. “This is exactly the type of construction-labor boost the housing market needs to continue to see in 2018 to feed inventory-starved cities that are seeing strong jobs growth like San Antonio, Orlando, Nashville and Salt Lake City.”
But one expert pointed out the construction industry still needs to add many more jobs before it can keep up with growing homebuyer demand, and even suggested solutions such as offering temporary immigration visas.
“As to the supply of homes, construction workers are needed,” said Lawrence Yun, National Association of Realtors chief economist. “In 2017, a net 190,000 new workers were employed in the construction industry, and that also marks a decelerating trend, as the prior three years averaged 284,000 annual additions.”
“With the unemployment rate in the construction industry having fallen from over 20% in 2010 to 5.9% at the year-end of 2017, there could be a little growth to home construction despite the on-going housing shortage,” Yun said. “There needs to be serious consideration in allowing temporary work visas until American trade schools can adequately crank out much needed, domestic skilled construction workers.”