While trade disputes and market volatility have captured headlines recently, many aspects of economic life remain benign. The nation has added jobs for 106 consecutive months, an all-time record. Unemployment remains near a 50-year low. Wages are expanding at their fastest pace in roughly a decade. Inflation remains low, and mortgage rates have declined to unimaginably appealing levels from the perspective of borrowers. Add in warmer weather and plentiful sunshine, and one would appear to have a recipe for rapidly expanding home sales in Maryland.But Maryland’s economy, which manifested considerable economic momentum in 2018, has demonstrated precious little capacity to expand in 2019.
The 35-day federal government shutdown served as much more of an inflection point than anticipated, with federal contracting momentum interrupted and with recruitment of top talent becoming far more challenging for federal contractors and agencies alike.There are many ways in which this loss of economic momentum has made itself known, including in the form of incredibly soft job creation. Between June 2018 and June 2019, only one state (Louisiana) added jobs more slowly than Maryland in percentage terms. During this period, the Free State added a paltry 3,900 net new jobs, representing growth of just 0.1 percent. The bulk of jobs added were in the Baltimore metropolitan area. In fact, available data indicate that the balance of the state has actually lost jobs on net over the past 12 months.
Predictably, Maryland’s malaise has also been apparent in the owner-occupied housing market. The softness in housing has not been universal. In much of the Sunbelt, suburbs around booming cities like Nashville, Atlanta, Orlando, and Dallas are experiencing a torrent of homebuying as Millennials, now ages 23–38, are belatedly getting married, having children, and moving to the suburbs just as their grandparents and parents did. But for these dynamics to exist, there must be sufficient job creation to allow people to save for down-payments and support enough confidence for people to chase the American dream.In Maryland, slow job growth working in combination with anemic housing inventory in many communities has conspired to drive home sales lower.
In June, home sales were down 11.4 percent relative to the same month one year earlier. Average price was up 4 percent, however, with the largest increases among a set of Eastern Shore communities: Talbot (plus 36.3 percent), Wicomico (plus 21.2 percent), Queen Anne’s (plus 8.4 percent), and Caroline (plus 7.5 percent) counties. Statewide median sales price was up 3.1 percent in June on a year-ago basis.Is Maryland’s Momentum Poised to Reemerge?In a sign of a possible turnaround both in the local housing market and in the broader economy, pending unit sales were up sharply in June (15.1 percent) in Maryland, likely a response to recent declines in mortgage rates.
One can speculate that the sharp decline in mortgage rates has rendered buyers a bit less price sensitive than they had been earlier, allowing sellers to enjoy their moment at the settlement table a bit more. Low inventory also supports higher prices, including in places like Baltimore County, Carroll Frederick, Harford, Howard, Montgomery, and Prince George’s counties where inventory remained below three months of supply through June. A year earlier, months of inventory statewide stood at 3.6 months. By June 2019, it had declined to 3.1 months.
