House Prices and the Unemployment Rate

On Friday the Bureau of Labor Statistics will release the unemployment rate for December.   Whatever the numbers look like we are sure to hear a debate about housing and unemployment — are they related, which causes which and does one hold the key to solving the other.  A quick look at the way home prices in the 20 S&P/Case-Shiller cities have moved in the year ended in October and unemployment rates reported for those same cities in November suggests that the two are related.  The chart shows a scatter diagram of the unemployment rate on the vertical axis and the change (mostly decline) in home prices on the horizontal axis.  The higher the unemployment rate, the more home prices dropped.

Home Prices and the Unemployment Rate

Scatter Diagram of Unemployment and Change in Home Prices

There doesn’t tell whether falling home prices raise unemployment or high unemployment depresses home prices. In fact, it is quite possible that some other factor is driving both house prices and unemployment.  However, since unemployment is an important measure of a local economy, it should be no surprise that one of the better performing cities for home prices, Washington DC, has one of the lowest unemployment rates.   The table shows the data used in the chart.

Data for the Chart

Home Prices and Unemployment Rate Table

The posts on this blog are opinions, not advice.
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One Comment

  1. Al McMurchie says:

    Thank you for your website. It is a helpful resource as my wife and I attempt to make sense of the real estate market as small investors in Minneapolis. I just read a thoughtful article regarding Atlanta and the downward movement to values. Then I see the data comparing unemployment rates to value in your article. My question is: “what’s going on in Minneapolis?” We have the best unemployment situation yet are in the bottom three for home value appreciation. Perhaps in a future article you could take up that question. Thanks again. Al

  2. [...] Sacrifice – Bloomberg Chinese Government Battles ‘Demographic Tsunami’ – Bloomberg House Prices and the Unemployment Rate – HousingViews The Real Estate Market that Defies the Trends – Time Richard Cordray [...]

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  1. By Thursday Morning Links | Iacono Research on February 26, 2012 at 8:39 am

    [...] Sacrifice – Bloomberg Chinese Government Battles ‘Demographic Tsunami’ – Bloomberg House Prices and the Unemployment Rate – HousingViews The Real Estate Market that Defies the Trends – Time Richard Cordray [...]

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