| The Employment Situation Report for November was unsettling at best. The economy, as reflected in job creation (or perhaps re-creation is a better word) from the massive layoffs in the spring, had been slowing recently. But it pretty much stalled last month.
The Bureau of Labor Statistics reported there were only 245,000 jobs added during the month, well below the 469,000 that analysts expected. It was the smallest employment gain since the job market started to recover in May from the nearly 21 million jobs that were lost in the first months of the pandemic. Further, the estimate of October job creation was downgraded by 28,000 jobs to 610,000. The number of unemployed persons declined slightly to 10.7 million.
The unemployment rate edged down from 6.9% in October to 6.7%, but this wasn’t necessarily good news as fewer people were looking for work. The labor participation rate dropped by 1.9 points to 61.5%.
Wages are holding steady. They have increased by 4.4% year-over-year, identical to the increase posted for October.
Home Prices on Fire!
But, as economists are increasingly concerned about a possible re-recession in the face of rising cases of COVID-19, housing continues to defy conventional wisdom on many fronts. Home prices are still on fire and CoreLogic says its Home Price Index (HPI) rose 7.3% over the 12 months that ended in October, the fastest rate of appreciation since April 2014.
Rising prices contribute to rising equity, and in a separate report, CoreLogic said home equity has grown over the past year at the greatest rate in six years. The average homeowner saw it increase by $17,000 since the third quarter of 2019. In California, that annual gain averaged $33,800.
Dr. Frank Nothaft, chief economist for CoreLogic said, “The average family with a home mortgage loan had $194,000 in home equity in the third quarter. This provides an important buffer to protect families if they experience financial difficulties.”
Black Knight’s Mortgage Monitor covering October loan performance data said the housing boom is reflected in mortgage originations as well. There were 6.4 million mortgage refinances in the first three quarters of the year and, in the third quarter, the volume of purchase mortgages ($455 billion) and refinances ($867 billion) were the largest ever recorded.
Swinging back to the November employment report, housing was the good news there as well. The National Association of Home Builders (NAHB) says residential construction employment rose by 15,400 jobs in November. This means that job gains in that sector have offset 96% of those lost in March and April.
The 30-year fixed-rate mortgage (FRM) was unchanged at 2.71%, the lowest rate in the survey’s history which dates back to 1971. If you want to take advantage of these record low rates, call or email us soon. |
