The recent jobs report reported 156,000 new jobs were created in September, with an average of 178,000 jobs created each month this year. These steady but unspectacular employment numbers suggest that the combination of tight labor markets, falling profits, and higher wages may slow job growth in the coming months, but the news is not all negative. Though the unemployment rate rose slightly to 5.0 percent, this is largely due to rising labor force participation. Wages have now grown by 2.6 percent during the past year. A combination of more confident workers and still risk averse firms is making it increasingly difficult for businesses to find the right workers at the right price.
Realtor.com’s chief economist Jonathan Smoke issued a statement about what these numbers – and a likely Fed rate hike on the horizon – could mean for the housing market.
“ numbers were strong enough to keep a rate hike from the Federal Reserve likely before the end of the year, and we are already seeing mortgage rates move in that direction,” said Smoke. “That’s both bad and good: Higher mortgage rates will make buying a home more expensive, but they will also likely make home loans accessible to more prospective buyers – a problem that has plagued the market for years.
“The current level of job creation should lead to continued strong household formation, which will keep demand for homes high. And as long as rates move gradually, consumers will be able to mitigate some of the effects of the rate uptick by shifting to a different mix of shorter fixed-rate term products and buying discount points. In the short term, demand could be boosted by those consumers most concerned about higher rates moving up their plans.”
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