While the number of jobs created exceeded expectations in the February employment report, wage growth was lower than expected, reports Diana Olick of CNBC, which is a negative for the housing market.
Fueled not by increased wages and demand but by a serious lack of supply in markets across the nation, home prices soared 6.9% in January compared to a year ago.
Olick explains the problem:
More people are entering the workforce, and that is surely increasing demand for housing, but not affordability. Low inventory is an issue for several reasons: Millions of borrowers are still either underwater on their mortgages or don't have enough equity in their homes to make a move. Baby boomers, who lost a lot of retirement money during the Great Recession and are working longer, are not selling their homes at the rate expected. Finally, home builders are still operating at far below the currently inflated demand and even below historical norms. As demand increases this spring, home prices have nowhere to go but up, and affordability down.
"The economy isn't getting the same bang for the buck from job creation as it used to. February's job surge didn't translate into higher pay," said Nela Richardson, chief economist at Redfin, a real estate brokerage. "For housing, as low inventory pushes prices up at a fast clip, the mismatch between fast-growing home prices and slow-growing incomes continues to be a huge obstacle for would-be buyers."