Jobs report could mean lower mortgage rates are coming
The pace of jobs and wages slowed in October, which may reduce inflation and potentially knock down mortgage rates in time for the spring selling season.
The latest batch of economic news is looking good for those hoping to see mortgage rate relief — without a recession.
Jobs and wages report: The economy added around 150,000 jobs in October, which is still a sign that the economy is growing, but the numbers were lower than expected. Wages were up 4.1% year-over-year, but that is the slowest pace since June 2021. That wage slowdown in particular is something the Federal Reserve wants to see as it attempts to get inflation back down to its 2% target.
The latest jobs data could reverse some of the effects of the September jobs report, which showed stronger-than-expected growth and was followed by several weeks of rising mortgage rates.
There are other key economic reports coming later this month, including the October Consumer Price Index, that could influence future Fed actions — but if inflation shows signs of cooling, it could mean the end of federal rate hikes for this tightening cycle, said Realtor.com Chief Economist Danielle Hale.
Mortgage rates: The Freddie Mac weekly survey showed a slight decline in the 30-year fixed rate, which dipped to 7.76% this week. It's the first decline after nearly two months of increases. And the Mortgage News Daily survey continues to show a significant downward trend. Daily averages hit 7.36% on Nov. 3 after topping 8% last month.
What to make of the data: Several real estate economists expect mortgage rates to hover between 7-8% for the rest of 2023, but some are now entertaining the idea that rates could fall in time for the spring homebuying season.
"The bond market is reacting as if the Fed will be cutting rates in 2024," said Lawrence Yun, chief economist at NAR, who is now expecting mortgage rates to be in the 6% range this spring. He pointed to the recent slide of the 10-year treasury yield as a sign that rates will go down. If that continues, he said the industry should see more buyers and sellers in the spring market.
Another factor leading to some home-sale optimism is how consumers are responding to economic and real estate market changes, said Lisa Sturtevant, chief economist at Bright MLS.
"American consumers are resilient and will adjust to the new normal. The strong desire for homeownership endures, and home sales activity likely will rebound strongly next year," Sturtevant said.