Today, in the Real Estate Newsletter: Asking Rents Mostly Unchanged Year-over-year

Brief excerpt:

Another monthly update on rents.

Tracking rents is important for understanding the dynamics of the housing market. Slower household formation and increased supply (more multi-family completions) has kept asking rents under pressure. ...

Apartment List: Asking Rent Growth -0.4% Year-over-year ...

On the supply side of the rental market, our national vacancy index now sits at 6.9 percent, the highest reading in the history of that monthly data series, which goes back to the start of 2017. After a historic tightening in 2021, multifamily occupancy has been slowly but consistently easing for over three years amid an influx of new inventory. 2024 saw the most new apartment completions since the mid-1980s, and with 750 thousand units still in the construction pipeline, the supply boom has runway to continue this year.

Realtor.com: 19th Consecutive Month with Year-over-year Decline in Rents

The median asking rent across the 50 largest metropolitan areas in the United States fell again in February, to $1,691. This marks 19 months in a row in which rent has fallen year over year, this time by 0.9% from February 2024.

This is much more in the article.

From BofA:

Since our last publication, our 1Q GDP tracking is up from 0.1% q/q saar to 0.4% q/q saar. [Apr 4th estimate]
emphasis added

From Goldman:

We left our Q1 GDP tracking estimate unchanged at +0.3% (quarter-over-quarter annualized). [Apr 3rd estimate]

And from the Atlanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2025 is -2.8 percent on April 3, up from -3.7 percent on April 1. The alternative model forecast, which adjusts for imports and exports of gold as described here, is -0.8 percent. [Apr 3rd estimate]

From Fed Chair Jerome Powell: Economic Outlook. Excerpt:

Turning to monetary policy, we face a highly uncertain outlook with elevated risks of both higher unemployment and higher inflation. The new Administration is in the process of implementing substantial policy changes in four distinct areas: trade, immigration, fiscal policy, and regulation. Our monetary policy stance is well positioned to deal with the risks and uncertainties we face as we gain a better understanding of the policy changes and their likely effects on the economy. It is not our role to comment on those policies. Rather, we make an assessment of their likely effects, observe the behavior of the economy, and set monetary policy in a way that best achieves our dual-mandate goals.

We have stressed that it will be very difficult to assess the likely economic effects of higher tariffs until there is greater certainty about the details, such as what will be tariffed, at what level and for what duration, and the extent of retaliation from our trading partners. While uncertainty remains elevated, it is now becoming clear that the tariff increases will be significantly larger than expected. The same is likely to be true of the economic effects, which will include higher inflation and slower growth. The size and duration of these effects remain uncertain. While tariffs are highly likely to generate at least a temporary rise in inflation, it is also possible that the effects could be more persistent. Avoiding that outcome would depend on keeping longer-term inflation expectations well anchored, on the size of the effects, and on how long it takes for them to pass through fully to prices. Our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem.
emphasis added

The headline jobs number in the March employment report was above expectations, however, January and February payrolls were revised down by 48,000 combined.   The participation rate increased, the employment population ratio was unchanged, and the unemployment rate increased to 4.2%.
Earlier: March Employment Report: 228 thousand Jobs, 4.2% Unemployment Rate
Prime (25 to 54 Years Old) Participation

Since the overall participation rate is impacted by both cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old.

The 25 to 54 years old participation rate decreased in March to 83.3% from 83.5% in February.
The 25 to 54 employment population ratio decreased to 80.4% from 80.5% the previous month.
Both are down from the recent peaks, but still near the highest level this millennium.

Average Hourly Wages

The graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees from the Current Employment Statistics (CES).  
There was a huge increase at the beginning of the pandemic as lower paid employees were let go, and then the pandemic related spike reversed a year later.

Wage growth has trended down after peaking at 5.9% YoY in March 2022 and was at 3.8% YoY in March.   
Part Time for Economic Reasons

From the BLS report:

"The number of people employed part time for economic reasons, at 4.8 million, changed little in March. These individuals would have preferred full-time employment but were working part time because their hours had been reduced or they were unable to find full-time jobs"

The number of persons working part time for economic reasons decreased in March to 4.78 million from 4.94 million in February.  This is above the pre-pandemic levels.

These workers are included in the alternate measure of labor underutilization (U-6) that decreased to 7.9% from 8.0% in the previous month. This is down from the record high in April 2020 of 22.9% and up from the lowest level on record (seasonally adjusted) in December 2022 (6.6%). (This series started in 1994). This measure is above the 7.0% level in February 2020 (pre-pandemic).

Unemployed over 26 Weeks

This graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 1.46 million workers who have been unemployed for more than 26 weeks and still want a job, up from 1.44 million the previous month.
This is down from post-pandemic high of 4.171 million, and up from the recent low of 1.056 million.

This is above pre-pandemic levels.

Job Streak

Through March 2025, the employment report indicated positive job growth for 51 consecutive months, putting the current streak in 2nd place of the longest job streaks in US history (since 1939).  
Headline Jobs, Top 10 Streaks Year EndedStreak, Months 12020113 2Current, N/A511 3199048 4200746 5197945 6 tie194333 6 tie198633 6 tie200033 9196729 10199525 1Currrent Streak
Summary:

The headline jobs number in the March employment report was above expectations, however, January and February payrolls were revised down by 48,000 combined.   The participation rate increased, the employment population ratio was unchanged, and the unemployment rate increased to 4.2%.
This was a solid employment report.

From the BLS: Employment Situation

Total nonfarm payroll employment rose by 228,000 in March, and the unemployment rate changed little at 4.2 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care, in social assistance, and in transportation and warehousing. Employment also increased in retail trade, partially reflecting the return of workers from a strike. Federal government employment declined.
...
The change in total nonfarm payroll employment for January was revised down by 14,000, from +125,000 to +111,000, and the change for February was revised down by 34,000, from +151,000 to +117,000. With these revisions, employment in January and February combined is 48,000 lower than previously reported.
emphasis added

Click on graph for larger image.

The first graph shows the jobs added per month since January 2021.

Total payrolls increased by 228 thousand in March.  Private payrolls increased by 209 thousand, and public payrolls increased 19 thousand (Federal payrolls decreased 4 thousand).

Payrolls for January and February were revised down by 48 thousand, combined.
The second graph shows the year-over-year change in total non-farm employment since 1968.

In March, the year-over-year change was 1.88 million jobs.  Employment was up solidly year-over-year.

The third graph shows the employment population ratio and the participation rate.

The Labor Force Participation Rate increased to 62.5% in March, from 62.4% in February. This is the percentage of the working age population in the labor force.

The Employment-Population ratio was unchanged at 59.9% from 59.9% in February (blue line).
I'll post the 25 to 54 age group employment-population ratio graph later.

The fourth graph shows the unemployment rate.

The unemployment rate increased to 4.2% in March from 4.1% in February.

This was above consensus expectations; however, January and February payrolls were revised down by 48,000 combined.  
I'll have more later ...

Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.

Friday:
• At 8:30 AM ET, Employment Report for March.   The consensus is for 135,000 jobs added, and for the unemployment rate to be unchanged at 4.1%.

• At 11:25 AM, Speech, Fed Chair Jerome Powell, Economic Outlook, At the Society for Advancing Business Editing and Writing (SABEW) Annual Conference, Arlington, Virginia

On Friday at 8:30 AM ET, the BLS will release the employment report for March. The consensus is for 135,000 jobs added, and for the unemployment rate to be unchanged at 4.1%.

From Goldman Sachs:

We estimate nonfarm payrolls rose by 150k in March, slightly above consensus ... We estimate that the unemployment rate was unchanged on a rounded basis at 4.1%.
emphasis added

From BofA:

Nonfarm payrolls are likely to increase by a robust 185k in March, higher than consensus expectations of 135k, due to payback in leisure & hospitality for cold weather in Jan and Feb. Government job growth is expected to come in at just 10k due to the federal hiring freeze/DOGE. Given the muted claims data in the survey week, we do not expect DOGE driven job cuts to be a sizable drag, although risks are to the downside. We expect the u rate to remain at 4.1%.

• ADP Report: The ADP employment report showed 155,000 private sector jobs were added in March.  This was above consensus forecasts and suggests job gains above consensus expectations, however, in general, ADP hasn't been very useful in forecasting the BLS report.

• ISM Surveys: Note that the ISM indexes are diffusion indexes based on the number of firms hiring (not the number of hires).  The ISM® manufacturing employment index decreased to 44.7%, down from 47.6% the previous month.   This would suggest about 50,000 jobs lost in manufacturing. The ADP report indicated 21,000 manufacturing jobs added in March.

The ISM® services employment index decreased to 46.2%, from 53.5%. This would suggest 30,000 jobs lost in the service sector. Combined this suggests 80,000 jobs added, well below consensus expectations.  (Note: The ISM surveys have been way off recently)

• Unemployment Claims: The weekly claims report showed about the same initial unemployment claims during the reference week at 225,000 in March compared to 224,000 in February.  This suggests layoffs in March were about the same as in February.

• Conclusion: Over the last year, employment gains averaged 155 thousand per month - and that is probably the current trend.  It seems early for the government related layoffs to significantly impact employment.  Also, although the ISM employment indexes were weak this month, my guess is headline employment gains will be above consensus in March.

From STR: U.S. hotel results for week ending 29 March

On the positive side of the Easter calendar shift, the U.S. hotel industry reported increases across the key performance metrics, according to CoStar’s latest data through 29 March. ...

23-29 March 2025 (percentage change from comparable week in 2024):

• Occupancy: 65.1% (+4.4%)
• Average daily rate (ADR): US$161.65 (+2.5%)
• Revenue per available room (RevPAR): US$105.19 (+7.0%)
emphasis added

The following graph shows the seasonal pattern for the hotel occupancy rate using the four-week average.
Click on graph for larger image.

The red line is for 2025, blue is the median, and dashed light blue is for 2024.  Dashed purple is for 2018, the record year for hotel occupancy. 
The 4-week average of the occupancy rate is tracking last year and is lower than the median rate for the period 2000 through 2024 (Blue).
Note: Y-axis doesn't start at zero to better show the seasonal change.
The 4-week average will mostly move sideways until the summer travel season.  We might see a hit to occupancy during the summer months due to less international tourism.

Today, in the Real Estate Newsletter: ICE Mortgage Monitor: Home Prices Continue to Cool

Brief excerpt:

House Price Growth Continues to Slow

Here is the year-over-year in house prices according to the ICE Home Price Index (HPI). The ICE HPI is a repeat sales index. ICE reports the median price change of the repeat sales. The index was up 2.7% year-over-year in February, down from 3.4% YoY in January.

• Home price growth is beginning to cool as modestly improved demand is running up against higher levels of inventory across most major markets

• The annual home price growth rate dipped to +2.7% in February from +3.4% the month prior, marking the sharpest single month of deceleration in the annual home price growth rate since early 2023, 2023, with an early look at March data via ICE's enhanced Home Price Index suggesting that price growth has cooled further to +2.2%

• On a seasonally adjusted basis, home prices rose by +0.11% in the month, equivalent to a seasonally adjusted annualized rate of +1.3%, the softest such growth in five months

• In simple terms, that means that if the current rate of monthly growth we’ve seen in recent months were to persist, it would result in annual home price growth continuing to slow as we make our way through Q1 and into Q2 2025

There is much more in the mortgage monitor.

There is much more in the newsletter.

(Posted with permission). The ISM® Services index was at 50.8%, down from 53.5% last month. The employment index decreased to 46.2%, from 53.5%. Note: Above 50 indicates expansion, below 50 in contraction.

From the Institute for Supply Management: Services PMI® at 50.8% March 2025 Services ISM® Report On Business®

Economic activity in the services sector expanded for the ninth consecutive month in March, say the nation's purchasing and supply executives in the latest Services ISM® Report On Business®. The Services PMI® registered 50.8 percent, indicating expansion for the 55th time in 58 months since recovery from the coronavirus pandemic-induced recession began in June 2020.

The report was issued today by Steve Miller, CPSM, CSCP, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee: “In March, the Services PMI® registered 50.8 percent, 2.7 percentage points lower than the February figure of 53.5 percent. The Business Activity Index registered 55.9 percent in March, 1.5 percentage points higher than the 54.4 percent recorded in February. This is the index’s 58th consecutive month of expansion. The New Orders Index recorded a reading of 50.4 percent in March, 1.8 percentage points lower than the February figure of 52.2 percent. The Employment Index dropped into contraction territory for its first time in six months; the reading of 46.2 percent is a 7.7-percentage point decrease compared to the 53.9 percent recorded in February.
emphasis added

This was below consensus expectations.

The Census Bureau and the Bureau of Economic Analysis reported:

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $122.7 billion in February, down $8.0 billion from $130.7 billion in January, revised. .

February exports were $278.5 billion, $8.0 billion more than January exports. February imports were $401.1 billion, less than $0.1 billion less than January imports.
emphasis added

Click on graph for larger image.

Exports increased and imports decreased in February.

Exports were up 4.8% year-over-year; imports were up 19.7% year-over-year.
Exports have generally increased recently, and imports increased sharply. 

The second graph shows the U.S. trade deficit, with and without petroleum.

The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

Note that net, exports of petroleum products are positive and have been increasing.

The trade deficit with China increased to $21.1 billion from $19.9 billion a year ago.  
The surge in imports in January and February happened as some importers were avoiding the coming tariffs.

The DOL reported:

In the week ending March 29, the advance figure for seasonally adjusted initial claims was 219,000, a decrease of 6,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 224,000 to 225,000. The 4-week moving average was 223,000, a decrease of 1,250 from the previous week's revised average. The previous week's average was revised up by 250 from 224,000 to 224,250.
emphasis added

The following graph shows the 4-week moving average of weekly claims since 1971.

Click on graph for larger image.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased to 223,000.

The previous week was revised up.

Weekly claims were below the consensus forecast.