The U.S. Labor Market Continues To Outperform Expectations In The Face Of Stubborn Inflation


There is a sizable shortage of new homes after more than a decade of underbuilding relative to population growth, according to a new analysis released by This Week in Real Estate. The gap between single-family home construction and household formation grew to 6.5 million homes between 2012 – 2022. If multi-family construction is included – which is predominantly rental units – this gap is cut to 2.3 million homes. The February jobs report showed the U.S. labor market continues to outperform expectations in the face of stubborn inflation and aggressive rate hikes from the Federal Reserve. Below are a few newsworthy events from the first week of March that influence our business: 

U.S. Has a Shortfall of 6.5 Million Single-Family Homes Due to a Decade of Under-Building. A decade of under-building has led to a shortfall of 6.5 million single-family homes in the U.S., according to a new report released Wednesday. looked at household formation, housing starts, and home sales, and found that given how many households were formed between 2012 and 2022, the U.S. is short of 6.5 million single-family homes. But that gap diminishes somewhat if households opted to live in multi-family construction, which has boomed. Including multi-family homes, the gap in housing units in the U.S. falls to 2.3 million homes. Yet most of those multi-family units won’t necessarily provide a path to homeownership, said Hannah Jones, an economic analyst at Between 2012 and 2022, there were 15.6 million households formed, said. Yet in this 10-year period, only 13.3 million housing units were started, and even fewer – 11.9 million – were completed. Over that 10-year period, the rate of housing starts began to slow. “As inflation and mortgage rates likely soften later this year, buyers are likely to return to the market [and will be] in search of an affordable home, and the ongoing housing-supply shortage will only continue to put pressure on the market,” Danielle Hale, chief economist at, said. Read the full story here.

Mortgage Demand Recovers Slightly, Despite Rising Interest Rates. Mortgage demand recovered slightly, even though interest rates marched higher. Total mortgage application volume rose 7.4% last week, according to Mortgage Bankers Association’s seasonally adjusted index. This happened even as the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) increased to 6.79% from 6.71%. The jump in demand could just be the start of the traditionally busy spring market. The share of adjustable-rate mortgage applications, however, rose last week, suggesting more buyers are stretching to afford today’s still pricey housing market. Federal Reserve Chairman Jerome Powell on Tuesday told lawmakers on Capitol Hill that rate hikes could accelerate again. That spooked investors and sent bond yields higher. Mortgage rates loosely follow the yield on the 10-year Treasury. Read the full story here.

The U.S. Economy Added 311,000 Jobs in February, Outpacing Expectations. The US economy added 311,000 jobs in February, according to the latest monthly employment snapshot from the Bureau of Labor Statistics released Friday. February’s net job gains surpassed economists’ estimates for a more modest month, with only 205,000 to be added. While Friday’s report is a strong one, that’s actually bad news in the broader context of the Federal Reserve’s campaign to curb high inflation. “Coming up on the one-year anniversary of the Fed’s first-rate hike, we never thought we would see the economy churning out 311,000 more jobs this month,” said Chris Rupkey, chief economist of FwdBonds, in a statement. The monthly job gains remain well above pre-pandemic norms when roughly 180,000 jobs were added per month between 2010 and 2019. February’s employment report showed a 0.1 percentage point increase in the labor force participation rate to 62.5% – the highest it’s been since April 2020. However, it remains below pre-pandemic levels of 63.4%. Additionally, there was some upward movement in the jobless rate, which increased by 0.2 percentage points to 3.6%. Read the full story here.

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