Housing has led a recent economic improvement relative to the mid-spring months, according to National Association of Home Builders (NAHB) chief economist Rob Dietz. On the NAHB Now blog, Dietz writes that housing inventory numbers are continuing to improve while housing market volume is expanding as well.

The labor market is following the positive trends in housing. In May, construction hiring surged and job openings increased to 365,000, down only slightly from the 373,000 tally measured a year earlier. Indeed, home builders and remodelers added 83,200 jobs in June, after gaining 224,200 in May. This pickup matched the broader economy, which saw an employment gain of 4.8 million and a decline for the unemployment rate to 11.1%. The true jobless rate is higher than the official rate, but the NAHB forecast sees an unemployment rate near 10% at the end of 2020.

But risks remain. Rising virus-related hospitalizations in some southern and western states indicate ongoing community spread and threaten additional government-imposed economic shutdowns. Moreover, recent housing strength is, in part, due to an unlocking of sidelined housing demand from the early spring.

As this demand is met, some momentum for housing will ease. And double-digit unemployment rates will weigh on rental housing and entry-level housing demand during the second half of the year. However, low interest rates and the changing geography of housing demand (smaller metro and outer suburb demand outperforming large metro areas) suggest housing will continue to lead the economic recovery.

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