U.S. Housing Hold-Ups Put Thousands of Jobs on the Line

Analysts: As more people stall their homebuying plans, due to inflation, higher interest rates and economic uncertainty, it likely will impact RE industry jobs.

WASHINGTON – Americans may be more likely to put off home purchases given the current interest-rate climate and the economic uncertainty following Russia’s invasion of Ukraine.

“We’re seeing a reduction in buyer interest because of the cost of buying home and that’s due to both the run up in interest rates as well as the ongoing high cost of actually building a home,” said Robert Dietz, chief economist at the National Association of Home Builders.

U.S. existing home sales tumbled to a two-year low in May, but the median house price rose 14.8% from a year earlier to an all-time high of $407,600, passing $400,000 for the first time.

Fitch Ratings says it expects new home sales this year to fall 2%, compared to its earlier forecast of a 1.8% rise.

Some lenders and real estate firms may lay off workers as the market slows. Compass Inc. and Redfin Corp. both announced this month hundreds of job cuts.

Meanwhile, as the rate for the most popular U.S. home loan nears its highest level since November 2008, the effects may spread to mortgage companies as demand for refinancing wanes.

“There is almost no incentive to refinance. So that drop off in business, in addition to our view of slowing (home) sales, suggests there will need to be layoffs across the industry,” said Douglas Duncan, senior vice president and chief economist at Fannie Mae.

Olu Sonola, Fitch’s head of U.S. regional economics, said the Southern, Midwest, and Western parts of the United States will likely see more housing-related job losses than other areas as they significantly ramped up construction since the pandemic. Sonola added that home builders, on the other hand, may not need to announce layoffs because of the healthy backlogs.

“There’s still a lot of people who want a single-family home,” Dietz said.

Source: Reuters (07/01/22) Nishant, Niket; Ganapavaram, Abhijith; Deka, Kannaki

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