The U.S. economy added fewer jobs than anticipated in August, as reported by the Labor Department’s Bureau of Labor Statistics This Week in Real Estate. Additionally, there was a combined downward revision of 86,000 jobs for June and July. The unemployment rate decreased for the first time since March, dropping from the highest level in nearly three years of 4.3% to 4.2%. These cooling job figures highlight the Federal Reserve’s likely decision to cut its benchmark interest rate when it meets next week. According to Freddie Mac, the average rate for a 30-year fixed-rate mortgage remained steady at 6.35% last week, significantly lower than the rates from a year ago. The 30-year rate has decreased by 77 basis points compared to the same week last year. Below are a few newsworthy events from the first week of September that influence our business: AUGUST PAYROLLS GREW BY A LESS-THAN-EXPECTED, BUT UNEMPLOYMENT RATE TICKED DOWN. The U.S. economy created slightly fewer jobs than expected in August, reflecting a slowing labor market while also clearing the way for the Federal Reserve to lower interest rates later this month. Nonfarm payrolls expanded by 142,000 during the month, up from 89,000 in July and below the 161,000 consensus forecast from Dow Jones, according to a report Friday from the Labor Department’s Bureau of Labor Statistics. At the same time, the unemployment rate ticked down to 4.2%, as expected. The labor force expanded by 120,000 for the month, helping push the jobless level down by 0.1 percentage point, though the labor force participation rate held at 62.7%. An alternative measure that includes discouraged workers and those holding part-time jobs for economic reasons edged up to 7.9%, its highest reading since October 2021. While the August numbers were close to expectations, the previous two months saw substantial downward revisions. The BLS cut July’s total by 25,000, while June fell to 118,000, a downward revision of 61,000. “For the Fed, the decision comes down to deciding which is the bigger risk: reigniting inflation pressures if they cut by 50 [basis points] or threatening recession if they only cut by 25 [basis points],” said Seema Shah, chief global strategist at Principal Asset Management. In his pivotal annual speech at the Fed’s annual Jackson Hole, Wyoming, conclave, Chair Jerome Powell proclaimed that “the time has come” to adjust policy, though he provided no specifics for what that meant. Read the full story here.MORTGAGE RATES HAVEN’T BUDGED AFTER THE JOBS REPORT. Mortgage rates remained flat following a jobs report on Friday that continued to show a cooling labor market. Mortgage rate pricing for homebuyers hasn’t changed significantly as lenders have already priced in a Federal Reserve rate cut of 25 basis points (bps) that is expected later this month, loan originators told HousingWire. “For rates to go lower, we need more economic data weakness, or the spreads start to improve after this latest move lower in rates today,” HousingWire Lead Analyst Logan Mohtashami said. “Around labor data, we can see some volatility. The inflation data isn’t as important as it used to be, but jobs week, the weekly jobless claims data and Fed President statements can move markets.” Federal Reserve policymakers on Friday said they are ready to lower interest rates after their next meeting, September 17-18, noting it is the right time to do so. “It is now appropriate to dial down the degree of restrictiveness in the stance of policy by reducing the target range for the federal funds rate,” New York Fed President John Williams said at a Council on Foreign Relations event. “If the data supports cuts at consecutive meetings, then I believe it will be appropriate to cut at consecutive meetings,” said Fed Governor Christopher Waller, speaking at the University of Notre Dame. “If the data suggests the need for larger cuts, then I will support that as well.” U.S. central bankers have left the federal funds rate unchanged in the range of 5.25% to 5.5% since July 2023. Read the full story here.MORTGAGE RATES CONTINUED TO DECLINE IN AUGUST. Mortgage rates continued to decrease in August, landing at an average rate of 6.50%. According to Freddie Mac, the average monthly rate fell by 35 basis points (bps) from July’s rate of 6.85%. The August rate is down 57 bps from one year ago, which stood at 7.07%. The 15-year fixed-rate mortgage also saw a decrease, dropping by 45 bps from July to 5.68%, and is now lower compared to last August by 75 bps. Additionally, the 10-year Treasury rate declined 30 bps from 4.28% in July to 3.98%. Read the full story here.
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