A deteriorating labor market could have a positive impact on the real estate sector as mortgage rates continue to decline and the possibility of a rate cut by the Federal Reserve later this month remains open.
A key measure of the labor market, the construction quit rate, reached its lowest point since the aftermath of the Great Recession, signaling potential downward pressure on interest rates.
According to data released by the U.S. Bureau of Labor Statistics, the construction quit rate dropped to 0.9 percent, the lowest level since August 2009, just after the Great Recession ended.
Anirban Basu, chief economist of the American Builders and Contractors, noted that the data also indicated a concerning decline in labor demand across the industry, with fewer workers quitting their jobs and an increase in layoffs.
Despite the decrease in the construction quit rate, the number of open construction jobs rose in July. This data was part of the Job Openings and Labor Turnover Summary (JOLTS) report from the BLS, which also included other indicators for the real estate market.
The weakening labor market could potentially lead to lower mortgage rates, as seen in the recent trend of declining rates following comments from Federal Reserve Chair Jerome Powell regarding the economic risks posed by unemployment.