How home sales and job growth are related
New home sales in the U.S. fell a bit in August, but they’re still sitting near two year highs. Prices of new homes hit the highest point in five years. Also new this morning: Applications for mortgages rose last week — thanks to interest rates hitting record lows.
Nicolas Retsinas directs Harvard’s Joint Center for Housing Studies. He says that while we are still worried about the housing slump, we are “worried less and less every day. The data that comes out would lead us to believe that we are on the road to recovery; however, experience tells us there are still some potential potholes along the way.”
But how does an uptick in housing affect the job market? Turns out, they are pretty closely linked.
Here’s how it works: Jobs grow housing. If you land a job, the next step is to look for new digs. More young people, are now finding work and leaving their childhood bedrooms behind.
“The kids are starting to leave home,” says Jerry Nickelsburg, an economist at UCLA. “They’re getting jobs. In many places, we’re not really seeing home sales pick up, we’re seeing home building pick up, and that’s apartments that are being built.”
But housing also grows jobs — at least in places where it’s cheap.
Richard DeKaser is an economist and senior vice president at Wells Fargo. He says, during the housing crisis, people picked up and moved for a bargain, taking new jobs in places with plummeting prices for real estate.
“People have tended to migrate from where home prices are expensive in the Northeast to the South and the West,” DeKaser points out. “And those forces are still very much operating.”
Because, even though prices are going up, there are still bargains out there.
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