It is widely acknowledged that the recent, unprecedented surge in US immigration has helped to rebalance the labour market. But this large, positive supply shock may be waning. Net international migration estimates by the San Francisco Fed suggest that inflows of immigrants, while still elevated, slowed notably in the later months of 2024. For the full FY24, U.S. Customs and Border Protection reported 2.135mn encounters at and between ports of entry along the Southwest border, a 14% y/y drop from the nearly 2.5mn encounters recorded in FY 2023. The most recent data show an even steeper decline, with Southwest land border encounters sliding 54.7% y/y in the four months to October.
It is remarkable that, despite the unprecedented surge in immigration, the US jobless rate was still just 4.15% in October. The latest initial claims data suggest the jobless rate could quickly fall back down below 4%. Seasonally adjusted initial claims fell again in the week ending November 16th, down 6k to 213k, a 29-week low. The improvement in the unadjusted figure for initial claims was even starker. If net international migration slows by more than expected, as it is now doing, the labour market could tighten faster than many anticipate.
Despite elevated mortgage rates, annual house price gains have re-accelerated. According to Redfin, the median home sale price climbed 5.2% y/y in October to a fresh record high. Redfin’s timelier, weekly release showed an even steeper increase, up 6.4% y/y in the four weeks ending November 17th, the largest such increase since October 2022. This was accompanied by a jump in Redfin’s Homebuyer Demand Index, which posted its biggest y/y increase since early 2022.
