Explaining Southern California's economy

Lack of homes to sell is making trouble for the market in the West

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A sign is seen outside of a KB Home sales center in Richmond, California. A lack of housing supply in the Western U.S. is spurring homebuilders to start building again.

The National Association of Realtors (NAR) has released its pending home sales index for August. The index fell a bit from July but is up more than 10 percent from last August.

That's the national picture. But in the West, the story is...well, distorted. The July-August decline was more than 7 percent, and the year-over-over year was more than 4 percent. What's to blame? A lack of housing inventory, according to the NAR. 

I've been noting this trend often here at the DeBord Report. It's both good and bad. Good because a lack of supply to meet demand is encouraging homebuilders to...build! And that means unemployed construction workers have a good chance in the future to be not unemployed. But it's bad because the lack of supply, combined with historically low interest rates, is driving up prices. And it's dragging down pending sales — because there just aren't enough homes to be pending a purchase!


California unemployment: Getting better, but the West still bad

Career Fair Held In San Mateo

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A job seeker goes through a folder before meeting with recruiters at the National Career Fairs' San Francisco in San Mateo, California. California led the nation in jobs adding in June, according the Labor Department.

The Labor Department released its June jobs report for U.S. regions and states this morning, and California topped an important list: The state added 38,000 jobs compared with May, more than twice as many as the next-best-performing state, Ohio. California's jobless rate also fell very slightly, to 10.7 percent from 10.8 percent.

However, California remains at the center of an unemployment crisis in both the West region and the Pacific division (the Bureau of Labor Statistic collects data for nine geographical divisions in the U.S.). The unemployment rate both in the West and the Pacific division are the highest in the U.S., at 9.4 percent and 10 percent, respectively. Nevada is in the worst shape of all the states, with unemployment at 11.6 percent.

For what it's worth, if you want a job in the U.S., the best state to be in is North Dakota, with a 2.9 percent unemployment rate. Exceptionally low joblessness there is being driven by an energy boom.