The Federal Reserve announced This Week in Real Estate that it will maintain the Federal Funds interest rate at its current level. The Monetary Policy Committee believes that the risks related to achieving employment and inflation targets are gradually balancing. July’s employment data revealed a significant deceleration in job growth, leading to the unemployment rate rising for the fourth consecutive month to a nearly three-year high of 4.3%. This slowdown in the labor market suggests potential monetary policy easing in the coming months. As a consequence of the weaker-than-expected employment report, bond yields dropped sharply on Friday, leading to a 22-basis-point decrease in the 30-year fixed-rate mortgage. Notably, Friday marked one of the few instances in the past two decades with such a substantial single-day decline in average mortgage rates. Throughout July, mortgage rates continued to decline, averaging 6.85%. According to Freddie Mac, the average monthly rate decreased by 7 basis points from June’s rate of 6.92%. Below are a few newsworthy events from the last week of July that influence our business: MORTGAGE RATES TUMBLE TO LOWEST SINCE APRIL 2023 AFTER WEAK JOBS REPORT. Mortgage rates tumbled on Friday to their lowest since April 2023 after a weak jobs report sent bond yields sharply lower and boosted Wall Street’s expectations for an interest rate cut from the Federal Reserve at its September meeting. The average rate for a 30-year fixed mortgage dropped 0.22 percentage points to 6.4%, according to Mortgage News Daily. That’s the lowest average rate for the most commonly held home loan since April 2023, according to data from Freddie Mac. Read the full story here.SHARP SLOWDOWN IN US JOB GROWTH BOOSTS UNEMPLOYMENT RATE TO 4.3%. Nonfarm payrolls increased by 114,000 jobs last month, the Labor Department’s Bureau of Labor Statistics said. That was well below the 215,000 jobs per month added over the last 12 months. The U.S. unemployment rate jumped to near a three-year high of 4.3% in July amid a significant slowdown in hiring. The increase in the unemployment rate from 4.1% in June marked the fourth straight monthly increase, the Labor Department reported on Friday. Its rise from a five-decade low of 3.4% in April 2023 to now the highest level since September 2021 all but guarantees a September interest rate cut from the Federal Reserve, with economists calling for a 50-basis point reduction in borrowing costs. They argue that the U.S. central bank is most likely behind the curve in easing monetary policy. Read the full story here.HOMEOWNER EQUITY TURNS BACK UPWARD ACROSS U.S. IN SECOND QUARTER AS HOME VALUES SURGE. ATTOM released its second quarter 2024 U.S. Home Equity & Underwater Report on Thursday, which shows that 49.2 percent of mortgaged residential properties in the United States were considered equity-rich in the second quarter, meaning that the combined estimated amount of loan balances secured by those properties was no more than half of their estimated market values. The portion of mortgaged homeowners in equity-rich territory during the second quarter of 2024 rose from 45.8 percent in the first quarter of 2024, matching a high point reached in the Spring of last year. The increase reversed a series of three straight quarterly declines and marked one of the best gains in the past five years. The second-quarter equity gains came as home prices spiked during the 2024 Spring buying season, with the median national price shooting up 9 percent quarterly to a new record of $365,000. Read the full story here.
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