Rates Tick Down on Weaker Than Expected Jobs Report
After a five week climb, mortgage rates ticked down thirteen basis points from the prior week following a weaker than expected jobs report, according to the Freddie Mac Primary Mortgage Market Survey released May 9th. An environment where rates continue to hover above seven percent impacts both sellers and buyers. Many potential sellers remain hesitant to list their home and part with lower mortgage rates from years prior, adversely impacting supply and keeping house prices elevated. These elevated house prices add to the overall affordability challenges that potential buyers face in this high-rate environment.
Mortgage applications increased 2.6 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 3, 2024. “Treasury rates and mortgage rates fell last week on the news of a slowing job market, with wage growth at the slowest pace since 2021, and the Federal Reserve’s announced plans to ease quantitative tightening in June and to maintain its view that another rate hike is unlikely.” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist.
The Bureau of Labor Statistics (BLS) reported that the U.S. economy added 175,000 jobs in April 2024, the slowest jobs gain in six months and below market expectations. The unemployment rate ticked up from 3.8% to 3.9%. Overall, the April jobs report paints a picture of a labor market that is slowing but not weakening imminently. While the Fed welcomes signs of a more balanced labor market, they are being patient and have indicated they are in no hurry to lower interest rates until they see sustained, compelling evidence of slower inflation.
Initial filings for unemployment benefits have hit their highest level since late August 2023, a potential sign that an otherwise robust labor market is changing. Jobless claims totaled a seasonally adjusted 231,000 for the week ending on May 4, up 22,000 from the previous period and higher than the Dow Jones estimate for 214,000, the Labor Department reported Thursday. “Weekly jobless claims are one of the timeliest indicators of when the economy is starting to undergo serious deterioration, and the magnitude of new layoffs this week looks worrisome,” wrote Christopher Rupkey, chief economist at FWDBONDS.
