US housing market ready to rebound

WASHINGTON - The US housing sector was ready to get back to work while the construction industry continued to struggle on the jobs front, said the US mortgage giant Freddie Mac on Wednesday in a report.

Record-breaking low mortgage rates, supported by the Federal Reserve's "Operation Twist", had fueled housing demand and led to a pick-up in housing starts, home sales, and even house prices in many markets, said the report.

Housing starts over the first five months of 2012 had averaged an annual rate of 719,000, a 26-percent jump from the year-ago period. New home sales went up 17 percent and existing home sales rose 7 percent, comparing January-to-May 2012 with the same period last year.

"While housing may not have played its traditional role coming out of the Great Recession, at the end of the day, it has turned a very large corner and now it's time to get this sector back to work whether through construction jobs, remodeling, or home brokerage," said Frank Nothaft, Freddie Mac's vice president and chief economist.

However, the latest labor market reports showed that job creation continued but at a slower than expected pace during the second quarter. Overall, there was a net gain of 80,000 payroll jobs in June, bringing the total for the second quarter to 225,000, the lowest quarterly gain in employment in nearly two years and a lackluster result when compared to the first quarter's 677,000 job boost.

Employment in construction and mortgage finance continues to lag job gains elsewhere. Over the past 12 months overall payroll employment across all industries was up 1.8 million, yet construction employment was up a mere 13,000, well below the sector's share of total employment, about 4.3 percent.

But housing demand had helped to increase hiring in the construction sector on a year-over-year basis, and the unemployment rate for construction workers has fallen 2.8 percentage points since June 2011.