Housing Pile-Up Not Found to Be 'Important Driver' of Unemployment: Chicago Federal Reserve
Home-owner reluctance to sell their dwellings to relocate for a new job has played little part in boosting the U.S. unemployment rate, research from the Chicago Federal Reserve Bank showed on Wednesday.
Job vacancies rose after the end of the great recession, but the pace of hiring did not pick up as fast, prompting some observers to blame "house lock" for adding to jobless woes. A weak housing market, they speculated, may cause homeowners to forgo jobs in other cities or states rather than sell their homes at a loss.
But homeowners were just as likely as renters to move to another state to take a job, according to the research, published Wednesday in the latest Fed Letter. And workers in states with large declines in housing prices were no more likely to stay put than were workers in states where home prices fell less steeply, the research showed.
"Given our findings and the significant amount of other current evidence, we conclude that there is little empirical evidence that house lock has been an important driver of the recent high unemployment rate," wrote economic adviser Daniel Aaronson and associate economist Jonathan Davis.
The finding may be good news for the unemployment rate, which registered 9.2 percent in June. If workers were not moving to take jobs for fear of losing money on their homes, unemployment might not be expected to drop much as long as the housing market remains moribund.
Sales of previously owned U.S. homes touched a seven-month low, the National Association of Realtors said on Wednesday.
(Reporting by Ann Saphir; editing by Andrew Hay.)
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