Lack of housing a challenge for West Virginia, according to Richmond Fed

WHITE SULPHUR SPRINGS, W.Va. — Despite millions of dollar worth of business investment coming to West Virginia, a lack of housing remains a challenge for the state, according to Federal Reserve Bank of Richmond.

"We've talked about a bunch of the investments that are being made, and then we've talked about a bunch of the challenges, not the least of which is housing," said Tom Barkin, president and CEO of the Federal Reserve Bank of Richmond, while attending the West Virginia Chamber of Commerce's annual business summit at The Greenbrier in White Sulphur Springs.

Barkin said houses getting repurposed as Airbnbs, due to growth in the state's tourism industry, takes available homes off the market. Coupled with little new construction in the state, he said it has added to the challenge of finding places for people moving to the region to live.

According to the Richmond Fed's latest data on housing market conditions in the state, the number of residential permits issued increased by 19.5% in July 2024 compared to June 2024. Compared to July 2023, the number of permits issued rose by 11.8%.

According to the Federal Housing Finance Agency, home values appreciated by 4.1% in second quarter of 2024 compared to the first quarter of 2024. Home values grew by 10.4% in the second quarter of 2024 compared to the second quarter of 2023.

Barkin said he visits West Virginia often to get a better understanding of what's happening in the state.

"I've spent the week in the Mon Forest region, and I've talked to a bunch of people in those towns," he said. "There's a lot of good work being done to try to build an outdoor recreation economy."

Labor market conditions in West Virginia

"West Virginia's payroll employment declined slightly in July but has been steady over the past year due to strong hiring in education and health services," said Adam Scavette, an economist with the Richmond Fed.

Data showed West Virginia payroll employment decreased by 700 jobs (0.1%), on net, in July.

On a year-over-year basis, West Virginia payroll employment increased by 8,100 jobs (1.1%), on net. The data showed most jobs were added over the year in education and health services (6,900 jobs) and government (2,000 jobs). The industries that lost the most jobs over the past year were trade, transportation, and utilities (2,100 jobs) and manufacturing (900 jobs).

The unemployment rate in the state rose by 0.1 percentage point over the month to 4.2% in July and has risen 0.2 percentage point from its July 2023 reading of 4%, according to the report.

The next state employment report from the Richmond Fed is scheduled for Sept. 20.

Unemployment, inflation rates

Barkin said the U.S. economy is still in pretty healthy shape.

"Unemployment in the low fours. Inflation, which was very high two years ago, is coming down nicely and demands holding up. So we're really pleased with where we sit right now," he said.

Barkin said he is always interested in what's happening to demand, what's happening on the workforce and what's happening on pricing.

"We're, of course, very focused on whether inflation is coming down sustainably, as we hope," he said.

Barkins said consumers have not stopped spending.

"What I am hearing is that consumers are choosing, and they're if they go to a store and the price are too high, they're choosing to buy something else, or they're choosing to go to a lower price store," he said. "You want to see people still have money and still spending, but they're choosing, and they're choosing to walk away from higher prices, and that, of course, is what's bringing inflation down."