Each month we speak about how important the jobs report will be. Obviously, the creation of jobs is always very important. And because our economic recovery from the recession has been called a “jobless recovery,” this report has taken a special meaning. However, we cannot continue to call our recovery jobless. The economy was slow to recover the jobs that were lost, but the addition of over ten million jobs has changed our view.
This does not mean that this report is losing meaning. We are still not where we need to be with regard to the creation of jobs. There are millions who have left the workforce and others who are “under-employed.” What makes this report so special is the fact that it is the most important economic release before the Federal Reserve Board’s Open Market Committee meets to decide whether to raise rates.
There is no doubt that one more strong report will most definitely move the Fed to raise rates, unless there is an intervening factor such as an international crisis. Of course, that does not answer all questions. If they move, will it be a quarter of a percent or a half of a percent? And will this be the start of several moves, or will the Fed sit back and wait it out for the most of next year? The jobs report may help us answer one question, but there will also be plenty of questions following us as we move into 2016.
The Markets. Rates on home loans were down slightly in the past week. Freddie Mac announced that for the week ending November 25, 30-year fixed rates eased to 3.95% from 3.97% the week before. The average for 15-year loans was unchanged at 3.18%. Adjustables were mixed, with the average for one-year adjustables decreasing to 2.59% and five-year adjustables rising to 3.01%. A year ago, 30-year fixed rates were at 3.97%, virtually the same as today’s levels. Attributed to Sean Becketti, chief economist, Freddie Mac –“In a quiet week leading up to the Thanksgiving holiday, the 30-year fixed rates dipped 2 basis points to 3.95 percent. Economic releases over the last week contained no major surprises, and none are expected in the next few days. The year is winding down, and the only remaining market dates of note are December 4 — the last employment report of the year — and December 15-16, the long-awaited FOMC meeting.” Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.
Updated November 27, 2015
| Daily Value | Monthly Value | |
| Nov 25 | October | |
| 6-month Treasury Security | 0.39% | 0.11% |
| 1-year Treasury Security | 0.52% | 0.26% |
| 3-year Treasury Security | 1.25% | 0.93% |
| 5-year Treasury Security | 1.66% | 1.39% |
| 10-year Treasury Security | 2.23% | 2.07% |
| 12-month LIBOR | 0.838% (Oct) | |
| 12-month MTA | 0.256% (Oct) | |
| 11th District Cost of Funds | 0.651% (Sep) | |
| Prime Rate | 3.25% |
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Are all of the good lots already taken? Builders are increasingly vocalizing concern over the limited amount of developed lots available, which is greatly hindering their ability to ramp up construction. Builders say restrictive regulations, a shortage of financing for lot development, and buyers’ growing preference to live in or near cities – where there is little unused land left – are the main reasons behind the lot shortage problem. “It’s likely limiting the number of new homes for sale,” says David Crowe, chief economist of the National Association of Home Builders. What’s more, the tighter supplies are raising the costs to build homes. Earlier this year, 57 percent of builders reported the cost and availability of developed lots to be among their most significant problems this year – up from 46 percent who had rated it as a big issue in 2013, according to NAHB research. Finally, there’s less land in cities to build on. Builders say there are fewer available lots in or near cities, partially due to stricter zoning laws, particularly for multifamily complexes. Source: USA Today The remodeling of existing homes has bounced back from the housing bust and has now surpassed its pre-crisis level, according to the Urban Economics Lab Index, a newly launched index produced by BuildZoom and the MIT Center for Real Estate. The residential remodeling business has grown to an estimated $300 billion a year, according to the index. Yet, “despite its size, and even though it is a good indicator of consumer confidence, residential remodeling is generally overlooked,” says Issi Romem, chief economist of BuildZoom, a resource for remodeling and construction services. “The existing focus on new construction imposes a view of the economy that overemphasizes conditions in high-growth metro areas, and in particular on their fringe, where new home construction is concentrated. Remodeling provides a more evenly-distributed view of the economy, that is more likely to represent conditions in the nation as a whole.” New-home construction remains nearly 61 percent below its 2005 pre-crisis level, according to the index. On the other hand, remodeling of existing homes has fully recovered and has climbed 3.4 percent above its 2005 level. Source: BuildZoom |
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A recent survey from TransUnion reveals a majority of those planning on or considering buying a home in the next 12 to 18 months are unsure about actions that could help improve their credit score. A majority was also unsure about what their credit score directly affects in the home financing process. The national consumer survey found that while nearly three out of four (74 percent) of potential homebuyers believe it’s important to check the accuracy of their credit report, only 45 percent or fewer correctly understand that their credit score measures the amount of debt they hold, risk of not repaying back a loan, or the financial resources they have to pay back loans. “As many people across the nation prepare to take advantage of still-low interest rates and look to buy a home, it’s essential they understand their credit score before applying for a home loan,” said Ken Chaplin, senior vice president at TransUnion. Despite the fact that a majority of consumers recognized the importance of a credit score, one in three incorrectly thought increasing their income (33 percent) or closing old accounts (28 percent) before applying for a home loan has the potential to help improve their credit score. Source: NMP We can run your credit report for you if you are interested in seeing seeing your score and getting recommendations as to how to improve your score. 