Cracks show in real estate employment

Several real estate sectors lost workers in October, contributing to a slowing pace of job gains throughout the U.S., according to figures released Friday by the Department of Labor.

“Job growth for October was slightly stronger than expected, with a gain of 261,000 jobs,” economist Joel Kan of the Mortgage Bankers Association said in a statement. “The number of jobs added to the economy did slow from September’s total, but this was still a strong positive gain.”

Climbing interest rates, coupled with fears of economic decline, have put financial pressure on borrowers, from homebuyers to builders. Companies that rely on real estate transactions for revenue, including mortgage firms and brokerages, have also suffered.

Even the pandemic-era boom in industrial property showed signs of softening, as warehousing and storage companies lost a collective 20,000 workers last month. That amount is triple the sector’s September job losses. Leasing volumes in the robust Northeastern market have begun retreating toward pre-pandemic levels.

Monthly job growth in transportation and warehousing has averaged 25,000 this year, compared with 36,000 per month in 2021, according to the Department of Labor.

Losses in warehousing jobs were outweighed by gains in manufacturing, which added 32,000 jobs last month. Employment in manufacturing has increased by an average of 37,000 jobs per month so far this year, up from 30,000 per month in 2021.

Employment in construction was little changed last month, “consistent with the slowdown in the homebuilding sector,” according to Kan.

Job openings in the industry rose in September to 422,000, while the average hourly wage grew to $35.27 in October, a 0.6% month over month increase, according to Nick Grandy of the accounting firm RSM. “Labor is still the largest challenge in the industry,” Grandy said in a statement.

Employment in real estate leasing fell by a seasonally adjusted 8,700 jobs last month, after a decline of 6,000 in September. Meanwhile, the subsector that includes mortgage lending lost 4,200 workers in October, after being flat the month prior.

Leisure and hospitality continued to be a bright spot in the economy as lodging companies added 20,000 jobs — good for a sector-wide gain of 35,000 hires, including by bars and restaurants.

The industry remains marred by the pandemic, however, having added an average of 78,000 jobs per month so far this year, less than half of the monthly job gains in 2021, while overall employment remains 1.1 million workers, or 6.5 percent, below February 2020 levels.

Wage growth across the economy decelerated last month to a 4.73 percent year-over-year gain, compared with 4.98 percent in September. It was the slowest rate of growth since August 2021, which will make the central bank happy.

“The easing in wage growth might help reduce some inflationary pressure, but we expect the Federal Reserve to continue its current course of policy tightening until there is broader evidence of cooling inflation,” said Kan.