Job growth plunged in September due to Hurricanes Harvey and Irma.
The Labor Department reported that payroll growth declined by 33,000 jobs versus the 75,000 increase in new jobs expected. July job growth was revised lower by 51,000 to 138,000, while August was revised higher by 13,000 to 169,000 new jobs. This was the first negative reading in seven years, but the numbers will most likely reverse higher in the coming months as Americans rebuild after the devastation in the hurricane-impacted areas.
All was not lost within the report, though. Hourly earnings surged by 0.5 percent from August to September versus the 0.2 percent expected. Earnings are up 2.9 percent year over year. In addition, the Unemployment Rate fell to 4.2 percent, the lowest level in 16 years.
Home prices continued to heat up right through summer. Data analytics firm CoreLogic reported that home prices, including distressed sales, rose 6.9 percent from August 2016 to August 2017, up from a gain of 6.7 percent annually in July. On a monthly basis, prices rose 0.9 percent from July to August. Looking ahead, prices are expected to rise 4.7 percent from August 2017 to August 2018.
At this time, home loan rates remain historically attractive.
If you or someone you know has questions about home financing or home loan rates please contact me. I'd be happy to help.
Forecast for the Week
Wholesale and consumer inflation and Retail Sales will capture attention at week's end. Bond markets are closed Monday in observance of Columbus Day.
The light economic calendar begins on Thursday with the Producer Price Index and weekly Initial Jobless Claims.
On Friday, Retail Sales, the Consumer Price Index and the Consumer Sentiment Index will be released.
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.
When you see these Bond prices moving higher, it means home loan rates are improving. When Bond prices are moving lower, home loan rates are getting worse.
To go one step further, a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes are on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.
As you can see in the chart below, Mortgage Bond prices stumbled recently as Stocks rallied. Home loan rates remain attractive and near historic lows.
Chart: Fannie Mae 3.5% Mortgage Bond (Friday Oct 06, 2017)