Job growth accelerated, and the unemployment rate dropped to a three-month low of 4.1%. Additionally, employment gains for July and August were revised upwards by a total of 72,000 jobs. Before the release of the government’s monthly employment report on Friday, the average rate on a 30-year fixed-rate mortgage for the week rose modestly to 6.12%, up from 6.08%, according to Freddie Mac. This marked the first increase in seven weeks. Following the stronger-than-expected jobs report, mortgage rates spiked. Michael Fratantoni, the Mortgage Bankers Association’s chief economist, commented on the report, stating, “this news will push mortgage rates to the top of that range, but we do expect that mortgage rates will stay close to 6% over the next 12 months.” The MBA forecasts that longer-term rates, including mortgage rates, will remain within a relatively narrow range over the next year. Below are key events from the first week of October impacting our business:U.S. JOB CREATION ROARED HIGHER IN SEPTEMBER. The U.S. economy added far more jobs than expected in September, pointing to a vital employment picture as the unemployment rate edged lower, the Labor Department reported Friday. Nonfarm payrolls surged by 254,000 for the month, up from a revised 159,000 in August and better than the 150,000 Dow Jones consensus forecast. The unemployment rate fell to 4.1%, down 0.1 percentage point. With upward revisions from previous months, the report eases concerns about the state of the labor market and likely locks in the Federal Reserve to a more gradual pace of interest rate reductions. “It was ‘wow’ across the board, much stronger than expected,” Kathy Jones, chief fixed income strategist at Charles Schwab, said of the report. “The bottom line is it was a very good report. You get upward revisions, and it tells you the job market continues to be healthy, and that means the economy is healthy.” Earlier this week, Fed Chair Jerome Powell characterized the jobs picture as “solid” but said it has “clearly cooled” over the past year. Powell said Monday he expects the Fed to move in quarter-point increments at least through the end of the year. Read the full story here.PRIVATE RESIDENTIAL CONSTRUCTION SPENDING FALLS FOR THIRD STRAIGHT MONTH. Private residential construction spending fell 0.3% in August, according to the Census Construction Spending data. Nevertheless, it remained 2.7% higher compared to a year ago. The monthly decline in total private construction spending for August was largely due to reduced spending on single-family and multifamily construction. Spending on single-family construction fell by 1.5% in August. This marks the fifth consecutive monthly decrease. Despite these challenges, spending on single-family construction was still 0.8% higher than it was a year earlier. NAHB construction spending index on single-family construction has slowed since early 2024 under the pressure of elevated interest rates. Read the full story here.AVERAGE RATE ON A 30-YEAR MORTGAGE TICKS UP TO 6.12%, FIRST INCREASE IN 7 WEEKS. The average rate on a 30-year mortgage in the U.S. rose to 6.12% this week, the first increase in seven weeks. The rate ticked up from 6.08% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 7.49%. Last week, the average rate slipped to its lowest level in two years. The average rate on a 30-year mortgage is down from 7.22% in May, its 2024 peak. Rates have been mostly declining since July in anticipation of last month’s move by the Federal Reserve to cut its main interest rate for the first time in more than four years. Fed officials also signaled they expect further cuts this year and in 2025 and 2026. The rate cuts should, over time, lead to lower borrowing costs on mortgages. “Zooming out to the bigger picture, mortgage rates have declined one and a half percentage points over the last 12 months, home price growth is slowing, inventory is increasing, and incomes continue to rise,” Khater said. “As a result, the backdrop for homebuyers this fall is improving and should continue through the rest of the year.” Fannie Mae projects the rate on a 30-year mortgage will average 6.2% in the October-December quarter and decline to an average of 5.7% in the same quarter next year. Read the full story here.
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