Steady Employment Growth and Tight Home Sales Market Conditions in the Omaha HMA

Steady Employment Growth and Tight Home Sales Market Conditions in the Omaha HMA

The Omaha-Council Bluffs, Nebraska-Iowa Housing Market Area (HMA), which is located in HUD Region VII, experienced a 1.2 percent increase in nonfarm payrolls from July 2018 to July 2019. The education and health services sector is the HMA’s largest employment sector, accounting for 16 percent of area employment.

This analysis was completed before the COVID-19 outbreak in the United States and does not account for the economic and housing market impacts of the actions taken to limit the spread of the virus. Currently, the duration and depth of the economic disruption are unclear, as are the extent and effectiveness of government policies to counteract the disruption. HUD will continue to monitor market conditions in the area and will update this report as needed.

HUD’s Comprehensive Housing Market Analyses provide information on changes in local economies, housing markets, and populations and provide 3-year forecasts for demand in the area. This article is part of a series that sheds light on the content of these analyses.

The Omaha-Council Bluffs Housing Market Area (Omaha HMA) sits on the Missouri River, bordering the states of Nebraska and Iowa. The Omaha HMA includes the counties of Cass, Douglas, Sarpy, Saunders, and Washington in Nebraska and Harrison, Mills, and Pottawattamie in Iowa. The Omaha HMA is a regional hub for education, healthcare, and financial services. The population of the Omaha HMA is estimated at 953,600.

A recent Comprehensive Housing Market Analysis on the Omaha HMA highlighted the economic and housing market activity in the area.

Steady Employment Growth Led by Education and Health Services

From July 2018 to July 2019, nonfarm payrolls increased by 5,800 jobs, or 1.2 percent—three times the rate of growth during the previous 12 months. During this period, the unemployment rate averaged 2.9 percent.

Job growth occurred largely in the service sectors, which added 4,000 jobs, and in the goods-producing sectors, which added 1,800 jobs.

The education and health services sector is the HMA’s largest employment sector, accounting for 16 percent of area employment. The education and health services sector includes 4 of the area’s 10 largest employers. Employment in the sector grew by 300 jobs, or 0.3 percent, during the 12 months ending in July 2019. In May 2019, CHI Health opened a new clinic in the area, creating about 50 new jobs that contributed to growth in the sector. The Children’s Hospital and Medical Center in Omaha is expanding; a new clinical facility under construction is expected to open in 2021, which will create more jobs in the HMA.

Other large employment sectors in the Omaha HMA include the professional and business services, wholesale retail and trade, and government sectors, which make up 15, 14, and 13 percent, respectively, of area employment.

The HMA’s high demand for construction made the mining, logging, and construction sector the area’s fastest-growing employment sector. From July 2018 to July 2019, the sector added 2,200 jobs, an increase of 7.9 percent over the previous year.

Over the next 3 years, nonfarm payrolls are expected to increase by 1.4 percent annually.

Lack of Home Construction and Population Growth Lead to a Tight Housing Market

The homeownership rate in the Omaha HMA is estimated at 63.9 percent. The sales housing market in the Omaha HMA is tight, with an estimated sales vacancy rate of 1 percent. Limited new home construction and steady population growth have contributed to the low sales vacancy rate. The shortage of available for-sale inventory has caused a recent decline in home sales as well as an increase in sales prices. From July 2018 to July 2019, 20,600 homes were sold in the HMA, an 8 percent decrease from the previous year. Meanwhile, the average home sales price increased by nearly 6 percent, to $202,100, during the same period.

From July 2018 to July 2019, 2,500 sales units were permitted, a decrease of 17 percent from the previous year. Most new home construction is occurring in Douglas County, where, since 2010, 54 percent of all new home construction has taken place.

The Omaha HMA rental market is currently balanced, with a rental vacancy rate of 6.7 percent. Approximately 39 percent of renters live in single-family homes, townhomes, and mobile homes; 9 percent live in buildings with two to four units; and 53 percent of renters live in apartment buildings with five or more units. Apartment market conditions are slightly tight, with a vacancy rate of 4 percent.

From July 2018 to July 2019, 2,050 units were permitted in the HMA, which is a 16 percent decrease from the previous year. The report attributes this decline to the high level of rental unit permits issued during the 12 months ending in July 2018.

Over the next 3 years, demand is estimated for 9,650 new sales units and 5,575 rental units. For more detailed economic and housing market activity, see the Comprehensive Housing Market Analysis on the Omaha HMA.