Daily Update of Prescott Area Foreclosed Homes and Land, The Bank and REO Market Place as it pertains to The Greater Prescott Area and Yavapai County. Listings courtesy of The Bergamini Group @ Realty Executives Northern Arizona
The economic reports were pouring in last week, with several important data points released. Read on for details and what they meant for home loan rates.
The Labor Department reported that nonfarm payrolls rose by 165,000 in April, above the 155,000 expected. The numbers for February and March were revised higher by 114,000, bringing the four-month average to 196,000.
May 7, 2013
Most of the gains in payrolls were concentrated in bars and restaurants, retail, and the professional and business services sectors. Job losses were found from the government due to spending cuts.
The Unemployment Rate fell to 7.5 percent, the lowest level since December 2008 and down from the high of 10 percent in October 2009. However, the drop in the Unemployment Rate is due in part to the Labor Force Participation Rate (LFPR) being at a 35-year low of 63.3. The LFPR calculation is quite simple. If you are 16 years old and not in the military, then you either have a job or you don't. The ratio of people "participating" or working is then compared to the total population.
In other news, the Personal Consumption Expenditures (the Fed's favorite gauge of inflation) for March showed that inflation continues to remain tame. This likely influenced the Fed's decision in last week's meeting of the Federal Open Market Committee (FOMC) to continue purchasing $40 billion a month in Mortgage Bonds and $45 billion in Treasuries. The program should last through this year and could spill over into the beginning of 2014. What does this mean for home loan rates? In last week's FOMC meeting statement, the Fed noted that economic activity has been expanding at a modest pace but they continue to see downside risks to the economic outlook. Weak economic news typically causes investors to move their money from Stocks into Bonds as Bonds are seen as a safer investment. This includes Mortgage Bonds, to which home loan rates are tied, and this is why Bonds and home loan rates often improve when there is weak economic news.
Recently, Bonds and home loan rates reached 2013 best levels due to some weak economic reports, but the better-than-expected Jobs Report last Friday gave Stocks a boost late last week--causing Bonds and home loan rates to move away from these best levels.
Now is a great time to consider a home purchase or refinance. Let me know if I can answer any questions at all for you or your clients.