Labor market continued to grow in April. Employers created 253,000 positions in April, up from the 165,000 jobs added in March but below the year-to-date monthly average of 285,000. Hiring last month spanned most sectors, ranging from technical health care and professional services roles to hourly restaurant positions. April’s employment growth, paired with a reduction in the labor force, was enough to dip the unemployment rate back down to a historical low of 3.4 percent. Unemployment has held under 4 percent since January 2022, the longest such stretch in five decades. These metrics underscore the near-term demand for labor, bolstering current real estate performance.

Strong early year job growth aiding multifamily sector. Despite recent layoff news, several sectors — including business and professional services, as well as financial activities — grew headcounts last month at a faster-than-average pace. The accelerated hiring in fields with strong compensation potential bodes well for short-run housing demand as income insecurity can be a major constraint to household formation. While a net 117,400 apartments were vacated last year, multifamily net absorption returned to positive territory in the opening quarter of this year and is projected to proceed along that path for the near future. Although a robust delivery pipeline will push vacancy up, elevated mortgage rates and home prices continue to direct many newly-formed households to rentals.

Restaurant hiring reflects consumer trends, property needs. While down from recent months, 31,000 leisure and hospitality jobs were created in April, with 25,000 of those at bars and restaurants. These hiring trends reflect a persevering demand on behalf of consumers for social activities, even in the face of climbing prices. Retail sales at eating and drinking places were up 13 percent year over-year in March, bolstering the demand by such tenants for commercial space. The national retail vacancy rate has held at 4.7 percent since June 2022, backstopped by a more-than-decade low in availability for single-tenant net-lease properties. A minimal supply pipeline should help preserve operations in the near-term.

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Sources: Marcus & Millichap Research Services; Bureau of Labor Statistics; CoStar Group, Inc.; CME Group; Federal Reserve; MSCI, Inc.; RealPage, Inc