No big mortgage rate shifts expected after mixed jobs report
The U.S. lost 105,000 jobs in October but added 64,000 in November as unemployment hit the highest mark in over four years, according to the BLS.
A mixed jobs report released this week by the U.S. Bureau of Labor Statistics probably won't move the needle much when it comes to mortgage rates.
Losses in October, gains in November: The delayed report released on Dec. 16 signaled poor hiring and layoff conditions in October followed by an improved November. Meanwhile, last month's unemployment rate climbed to 4.6% — up from 4.4% in September and the highest rate since September 2021.
The addition of 64,000 jobs in November helped take some of the sting out of October, which showed a loss of 105,000 jobs driven by the anticipated loss of federal government jobs tied to buyouts and the government shutdown.
The overall labor market picture seems to suggest that the U.S. is still in a "low-fire, low-hire" environment, according to Sam Williamson, senior economist at First American.
Impact on mortgage rates: Following the report's release, the 30-year fixed-rate mortgage ticked down slightly to 6.27%, according to Mortgage News Daily.
Just last week, the Federal Reserve indicated that it is ready to take a wait-and-see approach to monetary policy after cutting short-term interest rates three times this year. While the latest jobs report includes enough warts to make additional rate cuts in early 2026 a possibility, the December jobs report will carry more weight, Williamson said.
For now, it appears the housing market will enter the new year amidst "a tug of war between the labor market and the mortgage market," said Lisa Sturtevant, chief economist at Bright MLS.
"Cooling economic conditions are likely to lead to lower mortgage rates in 2026, which would help fuel strong homebuying activity next year. However, uncertainty about job security among workers could temper housing demand, offsetting the benefits of lower rates," Sturtevant said.
Impact on affordability: With mortgage rates expected to remain at current levels, Realtor.com Senior Economist Jake Krimmel said affordability will likely remain front and center in the minds of consumers — and on this front, the latest jobs report showed some discouraging signs.
Wage growth slowed in November, rising 0.1% for the month and up just 3.5% compared to a year ago. Though still stronger than home price growth, wage growth is trending in the wrong direction for major affordability gains.
Residential construction jobs slow: While overall construction increased in November, the residential sector remains sluggish. The home building sector experienced job losses in five of the past six months, according to the National Association of Home Builders (NAHB), with a net loss of 42,200 jobs in the past year.
Builder sentiment ticked up slightly in December but is stuck at generally low levels, according to the NAHB. The association's Housing Market Index, which rose to 39 this month, hasn't been above the breakeven level of 50 since April 2024.
One positive sign from the builder confidence survey? Builders are slightly bullish about future sales expectations, according to Robert Dietz, chief economist at the NAHB.
"However, builders continue to face supply-side headwinds, as regulatory costs and material prices remain stubbornly high. Rising inventory also has increased competition for newly built homes," Dietz wrote in a Dec. 15 blog post.