Real Estate

The Bad News for Homebuyers Amidst a Booming US Job Market

US Job Market

Despite the red-hot labor market, it’s not the best news for homebuyers hoping for lower mortgage rates. The strong US job market is good news for the spring buying season as higher household incomes are a necessary component, but it also means mortgage rates are not likely to drop much further at this time,” Mortgage Bankers Association’s Mike Fratantoni said on Friday, after January’s blowout jobs report.

For US job market booming, homebuyers waiting for low mortgage rates, strong labor market strength may calm recession fears, but it isn’t the biggest update.

Such tightening complicates the timing of monetary easing, as the Federal Reserve will want to see the economy slow before cutting interest rates. Since mortgage levels loosely reflect monetary policy, a higher order could bounce back over the longer term.

A total of 353,000 positions were created that month, far exceeding the 187,000 expected. Wage growth jumped to 4.5%, while unemployment remained low.

The Federal Reserve needs to see the economy slow before cutting interest rates. Since mortgage levels loosely mirror monetary policy, a higher-for-longer regime can trigger a spike.

To start this week, the average 30-year fixed rate hit 7.04%, the steepest rise in over a year.

Although the weekly average remains at 6.63%, it may not go lower for a while, potentially slowing home sales.

Rates have fallen from October’s 8% peak, spurred by bets that the Fed will pivot policy in 2024, causing a steady rise in mortgage applications.

In that timeframe, homebuyers on a $3,000 monthly budget gained $40,000 as mortgage rates declined, according to real estate firm Redfin. However, the lack of inventory and sidelined sellers have kept prices stubbornly high, not translating into a spike in home sales.

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Editorial Director
I'm Shruti Mishra, Editorial Director @Newsblare Media, growing up in the bustling city of New Delhi, I was always fascinated by the power of words. This love for words and storytelling led me to pursue a career in journalism. In this position, I oversee the editorial team and plan out content strategies for our digital news platform. I am constantly seeking new ways to engage readers with thought-provoking and impactful stories.

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