Jobs Report Released. The last two employment reports have been very strong, bolstering consumer confidence and giving the economy some momentum as the summer wore on. Meanwhile, the Delta variant continues to grow providing trepidation concerning the future of the economy as the year wears on. Released on Friday, the August jobs report was not likely influenced much by the surge in COVID cases.
The increase of 235,000 jobs was seen as a significant disappointment, but the decrease in the unemployment rate to 5.2% was viewed as a positive. The previous two months of job gains were revised upward by 134,000 as well. Overall, the report was seen as falling short of expectations and the gain in hourly earnings added to inflationary concerns. It did not answer the question as to how much affect the latest surge in cases will have as the year rolls on.
That answer will take some time. Meanwhile, some market analysts are already pulling back on their predictions for strong economic growth during the second half of the year. The economy is not expected to contract, but the growth numbers are not expected to match the relatively hot numbers of the first half. The August jobs report could have just been a pause, or a start of this trend.
Weekly Interest Rate Overview
The Markets. Mortgage rates were flat again in the past week. For the week ending September 2, Freddie Mac announced that 30-year fixed rates remained at 2.87%, the same as the two weeks before. The average for 15-year loans rose one tick to 2.18% and the average for five-year ARMs increased slightly to 2.43%. A year ago, 30-year fixed rates averaged 2.93%, slightly higher than today. Attributed to Sam Khater, Chief Economist, Freddie Mac – “Economic growth and the acceleration in inflation have moderated in the last month, giving the markets comfort and leading to a stabilization in mortgage rates. Heading into the fall, home purchase demand is stable, home sales remain firm and above pre-pandemic levels, and inventory of unsold homes is tight but improving modestly. These factors will allow for home price pressures to ease over the remainder of the year.” 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
The United States population is getting more diverse, according to new data from the 2020 census that offers a once-in-a-decade look at the makeup of America. Over the past 10 years, people who identified as Hispanic, Asian or more than one race accounted for larger shares of the population, the data shows. Diversity is rising in almost every county. The overall U.S. population, though, grew at the slowest rate in nearly a century. William Frey, a demographer at the Brookings Institution, described the data as a pivotal moment for the country. “We have people of color who are younger and growing more rapidly,” he told The Times’s Sabrina Tavernise and Robert Gebeloff. “They are helping to propel us further into a century where diversity is going to be the signature of our demography.” The share of people who identify as white has been declining since the 1960s, when the U.S. opened up more widely to immigrants from outside Europe. But over the past decade, the total number of white people fell for the first time. The total population has grown at a drastically slower rate over the past decade. The growth that did occur since 2010 — an increase of about 23 million people — was made up entirely of people who identified as Hispanic, Asian, Black or more than one race. Source: The New York Times
To catch up with the rapid number of sales they’ve made over recent months, many home builders have stopped taking new orders—an unprecedented move. Builders are facing numerous challenges to completing projects already in the pipeline—material costs are surging and in short supply and labor shortages are holding activity back. “Through our history, to have somebody walk into our models and [to have to] tell them, ‘We don’t have a house for you to buy today,’ is something that is foreign to us,” David Auld, CEO of D.R. Horton Inc., said on an earnings call. By restricting the number of homes for sale, builders are prompting additional increases in new-home prices. The median price of a newly built single-family home was $361,800 in June, a 6.1% increase from a year earlier, according to the Commerce Department. Some individual builders are reporting much higher price jumps. “Because builders are intentionally not selling, it’s creating a lot of pricing power,” Alan Ratner, managing director at Zelman & Associates, a real estate research and advisory firm, told The Wall Street Journal. Source: The Wall Street Journal
In a market with inventory that, in many parts of the country, does not come close to meeting demand, the level of competition for houses has been intense, especially as buying picked up during pandemic-fueled remote work trends and resultant migration to more affordable and spacious abodes. Gradually, data show, home prices are stabilizing, supply is increasing, and that makes for slightly less-brutal bidding battles among homebuying hopefuls, according to the latest from researchers at Redfin. In July, 60.1% of home offers written by Redfin agents faced competition, down from a revised rate of 66.5% in June and a pandemic peak of 74.1% in April, according to a new report. While July’s bidding-war rate was the lowest since January, it was still higher than July 2020’s 57.9% bidding-war rate, according to Redfin. It’s also typical for competition to ease in the summer following the spring homebuying season, the researchers note. Agents in some of the country’s hottest markets report a reduction in overbidding and exceptions made in hopes of winning the bid like waiving inspection and appraisal contingencies and buying homes sight unseen. “Competition has started to slow in the last three weeks. We’re now seeing five to eight offers on homes instead of 25, and they’re coming in $5,000 to $10,000 above the listing price instead of $50,000 to $60,000,” said Scott Mercer, a Redfin real estate agent in Sacramento, California. “Buyers are pushing back. They’ve even started including appraisal contingencies again and making requests for repairs—things that were pretty much unheard of last year.” Source: DSNews