The US job market is currently thriving, with record numbers of Americans employed due to net new jobs created in the past month, year, and two years. The unemployment rate is also at a historic low of 3.5%. However, this job growth will be critical in generating fresh housing demand, as mortgage rates have stabilized and housing affordability remains a challenge for renters looking to buy a home.
To ease the upward pressure on home prices and apartment rents, more homes need to be built to ensure an increase in supply. This would also help tame overall consumer price inflation and permit the Federal Reserve to stop raising interest rates and potentially lower its short-term rate by the end of the year.
In December, the construction industry added 9,500 workers in the home-building sector, mostly towards apartment buildings. However, unlike the federal and state governments, where employment levels are back up to pre-covid days, local governments are having difficulty competing with other sectors in hiring people, including positions such as substitute teachers, school bus drivers, and police officers. There are 400,000 fewer local government employees now than pre-pandemic.
