More importantly, job postings indicate the labor market will continue to improve. According to Indeed, the seven-day moving average of the trend in job postings fell 34.1% annually as of May 29. That’s down from a 39.3% year-over-year decline on May 1.
An improving labor scenario may give the housing market a shot in the arm as more buyers look to take advantage of low mortgage rates.
This could bring a huge reprieve to the housing market and drive sales back into positive territory after April’s big crash.
But with employment now inching up, builders might be more confident re-entering the market given the lack of supply. According to data from Redfin, the U.S. housing market is sitting on just 2.9 months of supply, less than half of the ideal six-month level needed to maintain market balance.
The number of newly-listed homes tumbled 41.4% year-over-year in April to 457,666, which is the reason why prices have been rising. More supply is needed to entice more buyers into the market.
The good news is that homebuilder confidence rose last month. Following April’s big plunge, the National Association of Home Builders/Wells Fargo Housing Market Index gained seven points in May to a reading of 37. The survey saw a ten-point-jump in sales expectations for the next six months, while there was an eight-point increase in the index of prospective buyers.
A reading of more than 50 indicates that builders are confident of sales conditions. Though the reading remains off that mark right now, it cannot be denied that these are noteworthy improvements.
Demand for homes remains strong
Demand for homes remains strong despite difficult times. According to Redfin data, over 41% of listed homes saw a bidding war in the four weeks ending on May 9. That’s a big spike from the 9% of homes that saw a bidding war in January this year.
According to Redfin’s chief economist Taylor Marr:
Demand for homes has picked back up after hitting rock bottom in April, and that uptick paired with a lack of supply is a recipe for bidding wars. Homebuyers are getting back out there, searching for more space as they realize using their home as an office and school may become the norm.
And now that the employment scenario is getting back on track, it is likely that demand could keep rising as more consumers enter the market.