The U.S. economy added 178,000 jobs in March, potentially bringing good news for household formation and mobility. But the momentum may not continue into April.
A surprisingly strong March jobs report could bring good news for the spring homebuying season — but only if it marks the start of a sustained trend.
What the March jobs report says: The U.S. economy added 178,000 jobs in March, slightly knocking the unemployment rate down from 4.4% in February to 4.3%, according to the U.S. Bureau of Labor Statistics. Year-over-year wage growth was 3.5%, outpacing inflation — a factor that could help improve housing affordability.
Strong data — with a couple of asterisks: While this latest jobs report is strong on the surface, there are some important caveats, said Jake Krimmel, senior economist at Realtor.com.
First, February jobs numbers were revised downward from a loss of 92,000 jobs to a loss of 133,000. Second, March’s survey window predates the worst of the economic disruption caused by the war in Iran, meaning it is unlikely that signs of a stronger labor market will carry over into April.
“Despite an uncertain economic outlook, the labor market continues to show resilience, even if the line between stabilizing and stagnating remains thin,” Krimmel said. “Given the volatility of the past month, we will take this small win.”
What this means for the housing market: Whether this “small win” turns into something more for the wider economy will depend on the next jobs report.
The broader mix of hiring in March could indicate gains in worker confidence, job switching and household formation, said Sam Williamson, senior economist at First American. But the month-to-month volatility adds uncertainty.
Despite strong wage growth, housing affordability has taken a hit in recent weeks, noted Lisa Sturtevant, chief economist at Bright MLS. With mortgage rates reaching the highest weekly average in seven months after rising for five straight weeks, the spring homebuying season — typically the industry’s busiest time of year — has stalled.
“The noise and uncertainty across the labor market, mortgage market and overall economy suggest that housing market activity will continue to be subdued,” Sturtevant said.
Inflation data will be key for the Fed: The March jobs report also complicates the path ahead for the Federal Reserve. When the committee meets at the end of April, Sturtevant believes the central bank will rely heavily on inflation data due to be released next week. This makes a short-term interest rate cut unlikely.