May 11, 2021 – The Jobs Picture. Every month the jobs report is closely watched. But the April report has some special significance.


Economic Commentary

The Jobs Picture. Every month the jobs report is closely watched. But the April report has some special significance. Late last year the jobs recovery stalled as cases of COVID soared. But lately we have had better news. In March we added over 900,000 jobs. Another economic stimulus package was passed, and the economy’s first quarter growth rate exceeded 6.0%, according to initial estimates.

As far as COVID is concerned, we seemed to have turned the corner as tens of millions are now vaccinated with more on the way. All-in-all, we are painting a much rosier picture than we were just a few months ago. The April employment data serves to tell us whether the momentum will continue. You can’t have a recovery unless more people go to work. So how did we do last month?

The addition of 266,000 jobs was considered disappointing, as projections were for a much higher number. In addition, the previous two months of data, while much higher, was revised downward by 78,000 jobs. The labor participation and unemployment rates were little unchanged. What does this mean? We still have millions of jobs to recover before we can say that the recovery is complete. That will take some time. The monthly data is volatile and one month does not represent clear proof that we are not on pace for a full recovery. It will be interesting to see whether job creation accelerates again from here.

Weekly Interest Rate Overview

The Markets. Rates remained below the 3.0% level again last week. For the week ending May 6, Freddie Mac announced that 30-year fixed rates decreased slightly to 2.96% from 2.98% the week before. The average for 15-year loans fell one tick to 2.30% and the average for five-year ARMs rose to 2.70%. A year ago, 30-year fixed rates averaged 3.26%, 0.30% higher than today. Attributed to Sam Khater, Chief Economist, Freddie Mac – “Mortgage rates have remained under three percent for three consecutive weeks. Consumer income and spending are picking up, which is leading to an acceleration in economic growth. The combination of low and stable rates, coupled with an improving economy, is good for homebuyers. It’s also good for homeowners who may have missed prior opportunities to refinance and increase their monthly cash flow.” Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

Real Estate News

Zillow conducted its first-ever mover report, which found that more than one in 10 Americans (11%) say they already moved in the past year, either by choice or by circumstance, contributing to the “Great Reshuffling,” and millions of additional households could enter the real estate market as a result of the COVID-19 pandemic. Researchers from Zillow concluded that a significant number of homeowners say they’re more likely to move and sell their home as a result of the pandemic, representing an additional 2.5 million households that could enter a tight real estate market already driven by unrelenting demand. Life and financial uncertainty were listed as the top reasons that homeowners have not listed their home for sale during the pandemic among those polled. The COVID-19 vaccine is likely to change that and prompt many more people to move, as Zillow data found that 70% of homeowners said they would be comfortable moving to a new home when there is widespread vaccine distribution. Among recent movers, 75% said they moved for positive reasons, such as being closer to family or friends or living in an area they’ve always desired. Source: DSNews

Home remodeling has surged since the pandemic began, but many of the projects initially were smaller in scope. That is reversing as homeowners decide to go bigger with their renovation plans and beyond the DIY projects that dominated during the early stages of the COVID-19 outbreak. Homeowners are increasingly undertaking larger remodeling projects, including expanding and rearranging floor plans as they look to create dedicated home offices or increase a home’s functionality, according to the Q4 2020 Kitchen & Bath Market Index, released by the National Kitchen & Bath Association and John Burns Real Estate Consulting. The NKBA projects a 10.7% sales growth for the remodeling industry in 2021. The rising desire for large-scale projects is prompting homeowners to move away from DIY jobs and hiring professionals to do more robust renovations. “We’re seeing an incomparable surge in homeowners looking to rearrange floor plans, tear out complete kitchens, baths, and other rooms to make space for increased activity within the home, and generally create a space that better suits their evolving needs,” says Bill Darcy, the NKBA’s CEO. Indeed, remodeling contractors report a surge in business, but have faced the rising cost of materials and supply-chain disruptions as high demand for cabinetry and appliances has prompted shortages and delays. Contractors also report a shortage in the availability of skilled labor. Consequently, homeowners may have longer to wait for professionals to take on their remodeling projects.  Source: John Burns Real Estate Consulting

The demand for second homes is skyrocketing as more affluent remote workers are choosing to spend at least part of their time in holiday destinations, according to new data from Redfin. The firm revealed that the number of buyers who locked in mortgage rates for second homes grew by a record 128% year-over-year in March 2021, marking the 10th straight month of annual growth of above 80%. According to Redfin, the surging interest in vacation homes is indicative of the uneven financial recovery taking place throughout the US. “Wealthy Americans are likely to have held onto their jobs – many with the freedom to work remotely –and they’re earning money through a robust stock market and rising real-estate values,” Redfin said in a statement. “But people in lower income brackets are more likely to work in industries like restaurants, retail and hospitality that are still far from recovered.” Source: Mortgage Professional America

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