Over 200,000 jobs were added to the economy last month, an incredibly high clip that follows a poor showing in March.
This couples with a decrease in the the unemployment rate, a rise in hourly earnings and an increase in the average workweek.
Last month, the economy added 211,000 jobs compared to March’s increase of just 79,000 jobs.
After March’s poor showing, there were questions as to whether the economy was going to continue to grow at a healthy pace or not. After April’s report was released this morning, any concerns should be gone.
The strong jobs report from April shows that the economy is not slowing down, although it did hit a speed bump in March.
The healthy economy could have a profound influence on mortgage rates in the coming weeks. Normally, mortgage rates rise when there is positive economic news being released.
If this is the case, then there’s a high chance of rates jumping to higher levels at some point over the next few weeks.
About Non-Farm Payrolls
A survey of non-farming jobs is conducted each month to gauge the growth of the labor market. The data is presented the following month in the non-farm payroll report. Because employment is a central part of the economy, the non-farm payroll report is seen as one of the best economic indicators.
While the housing market and mortgage rates aren’t directly connected to the payroll report, they are bound to be affected by any large changes in the economy.
April’s report had plenty for people to get excited about. First, the added 211,000 jobs surpassed the expectation of 185,000 jobs. Growth was already expected to be strong, but it ended up being even stronger.
Second, unemployment has dropped to its lowest levels in the past decade. The current unemployment rate is 4.4%, meaning the economy is creeping closer to full employment.
Third, hourly earnings rose 0.3% month over month. If that happened every month, then people would, on average, experience an increase in wages of 3.6% each year.
Almost all signs point to a healthy economy, but there is room for concern. Mainly, the US is slowly approaching a point where there won’t be enough workers to fill all jobs.
This can slow the housing market since homes need to be built, but there aren’t always enough workers to build houses.
If this is the case, then home prices could easily jump over the next few years.
How Do Payrolls Affect Mortgages?
April’s jobs report was good news for the economy, but home buyers might want to be wary.
The better the economy does, the more likely investors are to put their money away from housing since housing is considered to be one of the safest investment options.
The more money that goes away from housing, the higher mortgage rates become to make them look like attractive investments.
Unfortunately, this causes the cost of purchasing a house to rise for home buyers.
The good news is that current mortgage rates are still much lower than their historical norm. It also helps that rates have actually decreased throughout the course of 2017, despite skyrocketing rates toward the end of last year.
Also, the Fed just concluded a meeting where they decided to maintain their current rate. This is good news for home buyers since it helps keep rates low for that much longer.
Home buyers will want to check rates before they become serious about their home search.
Mortgage rates change every day, and the jobs report is a factor that leads to changing mortgage rates.
Currently, rates are moving based on the information that investors have been given. They will continue to change until other news is released.