by Broderick Perkins
(5/20/2011) Erate Exclusive - If you want to pinpoint the hottest housing markets for new homes, it should come as no surprise that employment gains is a big indicator to watch.
According to a Hanley Wood Housing Intelligence Pro (HIP) report, employment and housing are inextricably intertwined.
March was the third straight month of significant job gains in the private sector with some areas faring better than others.
The Labor Department reported the top-three large metros (population of 750,000 or more) in terms of best year-over-year percentage increases in employment were Milwaukee, WI (with a 2.8 percent job gain), Dallas, TX (2.4 percent more jobs), and Houston, TX (up 2.1 percent).
HIP's data reveals median new home prices in Milwaukee surged 39 percent in the March year-over-year period while prices in Dallas and Houston increased 19.6 percent and 13.2 percent, respectively.
The bottom three worst performing regions were Sacramento, CA (employment down 1.8 percent), Baltimore, MD (employment down 0.4 percent), and Atlanta, GA (employment down 0.2 percent). Meanwhile, new home prices fell 6.3 percent from last March in Sacramento while declining 5.2 percent in Baltimore and 3.8 percent in Atlanta, according to HIP.
"One could say jobs and housing are joined at the hip, with jobs leading the way," according to the HIP report.
"Regions that are creating jobs and keeping steady employment are seeing the positive results spill over into the local housing market which is why it is important for labor market conditions to continue to improve," the report added.
It's a vicious Catch-22 cycle. Without jobs, consumers can't afford to buy homes. Without home sales and home starts, employment takes a hit.
Oklahoma City is enjoying labor market gains with a 5.2 percent unemployment rate, down from 6.8 percent a year ago. The city is on track to see the largest year-over-year gain in new home closings, 9 percent, for the first quarter of 2011, according to Another HIP report.
In St. Louis, where there's been a 4.4 percent increase in new home closings, year-over-year for the first quarter, the unemployment rate has dropped from 10.8 to 9.3 percent during the same period.
And in Philadelphia, where unemployment is down from 11 percent to 10 percent during the same period, new home closings are up 3.9 percent.
Mortgage rates are also giving these and other areas a cooperative boost. The average 30-year fixed-rate mortgage (FRM) below 5 percent for 12 consecutive weeks.
After falling five consecutive weeks to the lowest level since December 9, 2010, the national average mortgage rate was down to 4.61 percent in Freddie Mac's May 19 Primary Mortgage Market Survey.
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