The U.S. economy added a healthy 200,000 jobs in January, the Labor Department reported. The unemployment rate held at 4.1 percent, and hourly wages on average went up nine cents to $26.74.
“The best news from the January jobs report is accelerating wages, which rose 2.9 percent from a year ago,” said Lawrence Yun, chief economist of the National Association of REALTORS® (NAR), in a statement. “The continuing job growth of 200,000 in January, and 2.1 million over the past 12 months, have kept the economy at essentially full employment. It is now to the point where employers have to offer higher wages to attract new employees.
“Not all is fine, however,” Yun said. “The labor force participation rate is still stuck at 62 percent, compared to 67 percent a decade ago, prior to the big recession. Also, the tightening labor market along with faster wage gains means that the Federal Reserve is inclined to raise interest rates more frequently.
“Ultimately, the desire to buy a home will rise because of this strong job growth with higher pay, but the financial capacity to buy will be cut because of rising interest rates,” said Yun.
“Although the U.S. job market continues to be healthy, the real story when it comes to homeownership is what’s happening with wages,” said Joseph Kirchner, senior economist for realtor.com®, in a statement. “We aren’t seeing the wage growth we should be given the steady unemployment and strong GDP…Affordability will continue to be a major hurdle for this spring’s homebuyers as housing prices continue to increase.”
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