Jobs Data and More
Last week we had the last big data releases before the Federal Reserve Board’s Open Market Committee meets next week. This data included the first revision of the 3rd Quarter economic growth and personal income and spending. These reports came in on the strong side, with the economic growth revised higher and personal income and spending solid as well. Personal spending for October is especially important, because November is the start of the holiday shopping season. The money made in October certainly affects Black Friday sales.
The most important data was released on Friday, which was November’s jobs report. Nothing affects the economy more than the growth of jobs. Thus far this year, we have had strong, but not explosive jobs growth. Friday’s numbers came in at 178,000 jobs added, and a drop in the unemployment rate to 4.6% from 4.9%. While the headline number was much stronger than expected, the number of jobs created came in near expectations and the previous month was revised down by 20,000 jobs. This means that the lower unemployment rate was at least partially due to a shrinking labor force.
Just as important, wage growth came in at below expectations on a month-to-month basis, but slightly higher than expectations on a yearly basis, which was a mixed bag. Why is wage growth so important? The Fed is looking for any evidence of inflation to buttress their decision on rates. Right now, it is expected that the Fed will raise rates next week, but we don’t know by how much and what might be coming afterwards. This jobs report, taken together with the additional data released this week, certainly gives the Fed enough ammunition to support an increase. However, it is not clear that they have a mandate for anything above the expected 0.25%.
The Weekly Market Update
Rates continued their post-election climb last week. For the week ending December 1, Freddie Mac announced that 30-year fixed rates rose to 4.08% from 4.03% the week before. The average for 15-year loans increased to 3.34%, and the average for five-year adjustables moved up to 3.15%. A year ago, 30-year fixed rates were at 3.93%, approximately 1/8% lower than today's levels.
Attributed to Sean Becketti, Chief Economist, Freddie Mac -- "The 10-year Treasury yield remained flat despite an upward revision to third quarter GDP. The rate on 30-year fixed home loans rose 5 basis points to 4.08 percent, rising a total of 51 basis points in three short weeks. With rates at the highest we've seen this year; borrowers are moving more slowly on refinances. The latest Weekly Applications Survey results from the Mortgage Bankers Association show refinance activity down 16 percent week over week."
Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.
Special Event: Business Planning 2017
This webinar is focused upon helping those in the real estate industry set up a plan for success in 2017. Whether you are a real estate professional or a loan officer, this program will give help you determine what actions you need to take to achieve your goals.
Title: Business Planning 2017 Date: Wed, December 7, 2016 Time: 2:00 to 3:30 pm EST
For real estate agents and loan officers, last year again was one of the most interesting for our industry. We started the year with expectations for higher interest rates, fewer refinances and a reinvigorated housing market.
Though things started slowly, rates stayed lower than expected and it was a strong year for real estate and refinancings.
Again this year higher rates are expected. This will bring new challenges and opportunities in 2017, for example serving millennial homebuyers and finding more listings. Those who plan for success will find success is not an accident. Too many of us go through life expecting success but a lack of planning leaves us short of our goals.
Now, industry expert Dave Hershman will lead us through a very special webinar that is designed to help you build your business plan for next year and beyond. So that you can make the best of 2017, join us for this session presented before and after the Holiday Season -- a time for reflection and planning.