Let's give two cheers for the positive job numbers from the Bureau of Labor Statistics. The BLS reports that unemployment dropped to 4.4 percent in October, and nonfarm payroll jobs increased by 92,000 in the same month, numbers that follow significant job increases in September and August.
Sadly, jobs are not a panacea for the housing industry. The strong job growth and lower unemployment numbers have eased some of the more negative aspects of the ongoing housing downturn, but typically only in areas where job growth is strongest, such as Seattle.
“The job growth from Microsoft and Boeing has mitigated the downturn, but we are not weathering the storm completely,” says Joe Herr, director of design at Burnstead Construction Co. in Bellevue, Wash., a home builder that built about 120 homes last year but plans to finish about 100 this year.
NAHB economist Michael Carliner notes that while the job numbers are positive, they are not extraordinary.
“Certainly we don't have a 1990s-style boom in employment where average job growth was 200,000 a month,” he says.
Lawrence Yun, senior economist at the National Association of Realtors, says markets with strong job growth, such as the Seattle area, the Carolinas, Texas, and Oklahoma, are performing well during the downturn.
However, Yun says Florida, the D.C. metro area, and California have strong job growth, yet the housing market has slumped in those regions. He adds that the latest downturn has more to do with higher interest rates and declining consumer confidence than with a structural change in the economy.
“What's different about the economy now compared to the recession we had at the end of the Cold War is that we're in a job creation phase,” Yun explains. “Non-residential construction is performing very well, as are the financial, health services, education, and technology sectors,” he says.
Edie Ousley, a spokesperson for the Florida HBA, agrees that Florida is a good example of a place where job growth is strong but the housing market continues to slump.
“The strong job growth has not mitigated the downturn in Florida,” Ousley says. “The largest portion of the job growth in our state is in the services sector, and they are not the high-wage–paying jobs with people who buy new homes.”
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Learn more about markets featured in this article: Seattle, WA.