Jobs Report Shows Long Road Ahead for Housing Recovery
NEW YORK (TheStreet) -- The stronger-than-expected jobs report in June should boost confidence about the economy, an important driver of housing demand.
Still, the latest jobs report has a few sticking points that suggest that a real recovery in housing demand is still not near.
Trulia chief economist Jed Kolko notes that employment among young adults is still well below pre-bubble levels. Just 75% of 25-34 year olds are employed. That is up modestly from 74.9% a year earlier, but is still well below the 78% to 80% that prevailed in the pre-bubble days.
Young adults without a job are more likely to live with parents or family than start new households, Kolko notes. Just 12% of employed 25-34 year-olds live with their parents, compared with 20% of 25-34 year-olds who aren't working. Until more of these young adults start moving out of their parents' homes and starting their own households, we will not see a full-blown recovery in housing demand.
Separately, it is also worth noting that these young workers also are disproportionately saddled with student debt, another factor that is likely preventing them from buying a home.
The jobs report also showed that construction employment slowed in the second quarter. The economy added 16,000 jobs in the second quarter ending June, versus 40,000 in the first quarter and 29,000 in the fourth quarter of 2012.
Residential construction employment, including residential specialty trade contractors, was up 4.4% year-over-year and up 7.5% since it bottomed in January 2011.
Kolko notes that unemployment among construction workers is still high at 9.8%, compared to 7.6% for all adults. That is down from 20.1% in June 2010, but still historically high. Unemployment in pre-bubble era was less than 8%.
--Written by Shanthi Bharatwaj in New York.