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Job Creation Slows, Home Prices Rise

02/08/2016

IN THIS ISSUE

Last Week in Review: Job creation slows while home prices continue to rise. 

Forecast for the Week: Investors may waffle between Stocks and Bonds. 

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LAST WEEK IN REVIEW

"Should I stay or should I go now?" The Clash. Investors asked that question all week as they considered in which markets they may have overstayed their welcome. Economic data sent mixed messages as to whether Stocks or Bonds would be more gracious hosts to investment dollars. 

Case in point: After a whirlwind of job creation in October, November and December, the January Jobs Report showed a bit of a slowdown, according to the Labor Department. Payrolls rose by 151,000 in January. While still strong, the number is dwarfed by year-end leaps that helped make 2015 the second-best year for job creation since the late 1990s. The report also noted the Unemployment Rate dropped to 4.9 percent while wages increased, which is great news. 

In other events, inflation remained tame, manufacturing data was weak and personal spending was unchanged from the prior month. 

So, what does all this have to do with buying or refinancing a home? 

When investors move dollars from Stocks to Bonds, Mortgage Backed Securities and other Bonds improve. Because home loan rates are directly tied to Mortgage Bonds, home loan rates can improve as well. Last week's trading illustrated this, pushing home loan rates to lows not seen since April 2015. Mortgage rates sank even further, marking the fifth consecutive week of declines amid ongoing market volatility, the latest Freddie Mac Primary Mortgage Market Survey said.

The 30-year fixed-rate mortgage declined to 3.72% for the week ending Feb. 4, 2016, down from last week, when it averaged 3.79%. In 2015, the 30-year FRM averaged 3.59%. 

This is its lowest point since the week of April 30, 2015 when it averaged 3.68%.

On the housing front, home prices, including distressed sales, rose 6.3 percent from December 2014 to December 2015, according to CoreLogic, a leading global property information, analytics and data services provider. From November to December, prices were up 0.8 percent. CoreLogic cited strong demand and tight supply for the gains. 

Looking ahead, home prices are expected to rise 5.4 percent from December 2015 to December 2016. 

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FORECAST FOR THE WEEK

It's a quiet week for economic news. With little being reported, oil prices may continue to impact markets.

  • Economic data doesn't kick off until Thursday with weekly Initial Jobless Claims.
  • On Friday, Retail Sales and the Consumer Sentiment Index will be released.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result.

Economic Calendar for the Week of February 08 - February 12

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By: Michael Borodinsky

Vice President/Regional Builder Branch Manager | Caliber Home Loans

NMLS #460228

 

 

 

 

 

 

 

Call Michael: 732-382-2654

Email Michael: Michael.Borodinsky@caliberhomeloans.com

Follow Michael on Twitter: @mikeborodinsky

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