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Unemployment vs. U.S. Real Estate

Farid Abbasov

Real Estate Investor

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According to U.S. Bureau of Labor Statistics, seasonally adjusted unemployment rate for March of 2024 is 3.8% and has not moved much since February. About 20 states are above the national average, list can be seen below:

Although state unemployment levels are ranging below 6%, examining specific metro areas shows levels ranging from 1.8% to as high as 18.2%. By incorporating specific states and metropolitan areas from BLS data, more detailed analysis is possible.

Real estate is local, hence close examination of metro areas can help investors to make more informed decisions when navigating current market.

Very High Unemployment Metro Areas: Metro areas above 8% are in this category, conventional wisdom says we should expect to see slow down in market activity across these communities, hence unemployment is up consumer confidence will be down most likely not purchasing homes. Especially coupled with current mortgage rates, for near term makes you worry about the Real Estate market. More immediate impact of unemployment would be expected on rentals. The below metro areas are mostly located in California, with only Yuma, Arizona being an exception:

Bakersfield CA – 8.8 %

Merced CA – 9.8 %

Yuma AZ – 13.7 %

El Centro CA – 18.2 % (highest in the nation).

High Unemployment Metro Areas: Metro areas ranging 4.5 - 8% inclusive, are in this category. Again, looking at this data with mortgage rates, and increase in home prices one would expect to see lower sales, but month of February has shown some signs of increase in home sales compared to January, across the nation. Below are some examples:

LA – Long Beach – Anaheim CA – 5.0%

Fresno CA – 8.0%

Chicago – Naperville – Elgin IL – 4.6%

Decatur IL – 6.2%

Homosassa Springs FL – 4.8%

Atlantic City – Hammonton NJ – 6.1%;

Ocean City NJ – 7.6%

Moderate Unemployment Metro Areas: Metro areas ranging 3.5 - 4.4% inclusive, are in this category. This could be classified as somewhat more balanced real estate market. These areas most likely will be able to maintain a steady demand for housing. Moderate unemployment rates suggest a healthy, but not overheated economy that supports a stable real estate market with gradual price increases and consistent demand. Below are some examples:

Hot Springs (AZ) – 3.7%

Napa (CA) – 3.9%

San Jose – Sunnyvale – Santa Clara (CA) – 4.1%

San Fransisco – Oakland – Hayward (CA) – 4.2%

San Diego (CA) – 4.4%

Fairbanks (AK) – 4.0%

Seattle – Tacoma – Bellevue (WA) – 4.2%

Low Unemployment Metro Areas: Metro areas with unemployment under 3.5% are in this category. These areas can expect competitive housing markets, where demand exceeds supply, leading to quick sales and rising prices. Below are some examples:

Corvallis (OR) – 3.4%

Idaho Falls (ID) – 2.8%

Miami – Fort Lauderdale – West Palm Beach (FL) – 2.5%

Boston – Cambridge – Nashua (MA - NH) – 2.9%

Knoxville (TN) – 3.1%

Nashville – Davidson – Murfreesboro – Franklin (TN) – 2.7%

Unemployment further drops to as low as 1.8% in some metro areas across states such as SD, ND, UT, MN, VT etc. As unemployment gets lower than 3.5%, we don’t see many western metro areas. Conversely, as we go above 6%, we mainly observe CA metro areas with a few NJ and IL metro areas.


The interplay between mortgage rates and unemployment is pivotal in shaping real estate dynamics. In general, high unemployment might lead to lower mortgage rates as a policy measure to stimulate the economy, potentially making housing more affordable.

Conversely, low unemployment rates can signal a strong economy, which might result in higher mortgage rates to curb inflation, potentially slowing down the real estate market. This correlation suggests that in areas with rapidly changing unemployment rates, the real estate market could be directly affected by shifts in mortgage rates, influencing both affordability and demand. Furthermore, the impact of unemployment on the real estate market is complex and varies significantly across different states and metropolitan areas. Although some states may show high unemployment at state level, a closer look at metro areas and you may find pockets of opportunities.

Coupled with unemployment, investors should also keep in mind the correlation amongst unemployment, inflation and mortgage rates additionally supply levels are another important factor. Lower cost of mortgage will motivate more individuals to buy homes if they are employed. However, unemployment levels need to be studied further in order to determine the population that’s effected and their likelihood of getting a mortgage in the first place. For example, if we say first time home buyers fall into 25–34-year-old demographic, for the month of March 2024, seasonally adjusted rate for 25 years or older, with bachelor’s degree or higher is 2.1% compared to those with less than a high school diploma of 4.9%. Reminding that national average for the same month is at 3.8%. Depending on the target audience the picture varies, hence impact on different assets as well. Depending on who is renting, or the kind of real estate asset we are talking the impact may be seen differently.

REAL ESTATE SALES All of this can be coupled with National Association of Realtors ( data, indicating February sales increased 9.5 % from January 2024. February's existing-home sales reached a 4.38 million seasonally adjusted annual rate. February sales of existing homes declined 3.3% from February 2023. On the other hand, national median existing-home price for all housing types reached $384,500 in February, up 5.7% percent from a year ago. Effects of inflation can be seen in rising prices and low sales compared to last year, but recently there has been an uptick in the market activity compared to beginning of this year, so we will have to wait and see.

At 480,000 units, existing-home sales in the Northeast were identical to January but down 7.7% from February 2023. It's the fourth consecutive month that home sales in the Northeast registered 480,000 units. The median price in the Northeast was $420,600, up 11.5% from one year ago. - Unemployment data varies around 2-3 across MA, VT, NH with Maine at 3.4% Connecticut and New York 4.4 and 4.5% respectively.

In the Midwest, existing-home sales propelled 8.4% from one month ago to an annual rate of 1.03 million in February, down 3.7% from the previous year. The median price in the Midwest was $277,600, up 6.8% from February 2023. – Unemployment levels here are mostly on the lower side. May be there is greater potential to be seen as a result of healthy unemployment moderately lower price increase compared to other regions.

Existing-home sales in the South leapt 9.8% from January to an annual rate of 2.02 million in February, down 2.9% from one year earlier. The median price in the South was $354,200, up 4.1% from last year. – Unemployment hovering around average some states even lower. The same about the greater potential could be said here as well.

In the West, existing-home sales skyrocketed 16.4% from a month ago to an annual rate of 850,000 in February, a decline of 1.2% from the prior year. The median price in the West was $593,000, up 9.1% from February 2023. – Although looking at unemployment data for February we see that west is generally higher at around 4 – 5%. Local sales would be interesting comparison to see how it maps with unemployment. Other factors than unemployment most likely influencing these sales numbers also.