How Employment is Reshaping the Housing Market

The national labor market is weakening, with many high-income industries reporting minimal to no growth. In turn, the pool of qualified homebuyers is shrinking. To assess how employment performance is impacting housing markets at the local level, a recent study from John Burns Research and Consulting (JBREC) analyzed employment data across major U.S. metros. Overall, they found that high-earning industries are losing steam across major cities, ultimately causing homebuyer demand to slow.

Which industries are seeing employment slow the most?

High-income sectors—including information, professional services, and financial services—are seeing the slowest employment growth, according to JBREC. With rising home prices, workers in these industries tend to drive buyer demand the most. As of most recent August data, year-over-year employment growth for high-earning industries was flat. Comparatively, these sectors' long-term compound annual growth rate is 1.6%.

Which industries are continuing to grow?

Meanwhile, the education and healthcare sectors are responsible for creating the most job growth across major U.S. metros. Because these sectors typically offer lower wages, they are often responsible for creating more rental demand than homebuying demand. Nationally, education and healthcare employment rose by 3.3% year-over-year in August, which is above the long-term compound annual growth rate of 2.1% for these sectors.

Most major metros are seeing slow job growth, but some are still reporting strong employment and homebuyer activity

Philadelphia is growing jobs at 1.8% year-over-year, and New York is close behind at 1.7%. Both cities are outperforming their long-term averages of 1.1% and 1.6%. In Charlotte, N.C., job growth is even higher at 2.6% year-over-year. This growth is largely driven by a 4.5% increase in employment in the professional services industry.

On the other hand, the Bay Area continues to shed high-income jobs, with employment growth down by 0.4% year-over-year. Austin, Texas, and Denver are also seeing slow job growth. Austin is adding jobs at a rate of 0.8% year-over-year, and Denver’s growth was flat as of August. Both markets are seeing declines in tech and professional services roles. Even healthcare employment, which is growing in most areas across the U.S., is slowing in these metros.