Jan 9, 2013 | The Economy
The Bureau of Labor Statistics (BLS) Non-Farm Payrolls report for December exceeded Wall Street’s expectations by 5,000 net new jobs, showing 155,000 positions created in December.
The December tally raised the economy’s 12-month total to 1.84 million net new jobs created nationwide. Jobs added in December mark the 27th consecutive month of job growth.
Job sectors showing the strongest growth to close out 2012 included:
- Health Care
- Drinking and Eating Establishments
- Construction
- Manufacturing
Private-sector hiring is driving the jobs market, too. 168,000 new private sector jobs were added in December. Government jobs fell by thirteen thousand.
Monthly job creation has averaged +153,000 jobs since 12 months ago. It’s a fine measure of growth but economists believe it’s not enough job creation to significantly reduce the national unemployment rate. 14.4 percent of workers are categorized as under-employed.
December’s national unemployment rate was 7.8 percent, representing 4.8 million job seekers. This figure matched Wall Street’s expectations and was equal to November revised unemployment rate of 7.8 percent.
The improving jobs market and national unemployment rate make an impact on both mortgage rates and Worcester County area home prices.
Job creation suggests an expanding economy, which typically leads mortgage rates higher. In addition, with more employed persons nationwide, the potential home buyer pool grows larger, which introduces new demand to the housing market. With more demand, all things equal, home prices rise.
Job growth is one reason why home values climbed more than 5 percent in 2012, according to the Federal Home Finance Agency; and why the national housing supply would be exhausted in fewer than 5 months, at the current sales pace. Demand for homes is high and today’s low mortgage rates are extending buyer purchasing power in Worcester County area.
For home buyers, the expanding U.S. economy and steady job growth suggests that home prices may not rocket higher this year, but will continue to increase, little by little.
Jan 7, 2013 | Mortgage Rates
Mortgage rates in Massachusetts rose during the first week of 2013.
The fiscal cliff crisis was resolved prior to the market’s opening Wednesday, when legislators voted to approve a deal. While many tax cuts were extended for taxpayers earning less than $450,000 annually, other facets of the fiscal cliff issue are yet to be addressed, including budget cuts for federal government agencies.
Investors were surprised to learn that the Fed may end its third round of quantitative easing (QE3) sometimes in 2013. The FOMC meeting minutes for December 2012 suggested that Fed support for its QE3 program has waned as the economy has improved.
First-time jobless claims increased for the week ending December 29, 2012 to 372,000 from the prior week’s 350,000, worse than Wall Street’s consensus opinion of 360,000 new jobless claims.
The December 2012 Non-Farm Payrolls surpassed analyst expectations, posting 155,000 net new jobs for the month. The report also showed the national Unemployment Rate rising one-tenth of one percentage point to 7.8%. When the jobless rate falls to 6.5%, the Federal Reserve is expected to begin raising the Fed Funds Rate from its current target range near zero percent.
Overall, mortgage rates rose by as much as 0.25 percentage points last week. However, because the increase occurred wholly between Wednesday and Friday, Freddie Mac’s weekly mortgage rate survey failed to include it.
Freddie Mac reported the previous week’s average rate for a 30-year fixed rate mortgage was 3.34 percent for borrowers paying 0.7 percent discount points plus closing costs. The average rate for a 15-year fixed rate mortgage was 2.64 percent for borrowers paying 0.7 discount points plus closing costs.
As this week opens, mortgage rates are considerably higher.
This week’s scheduled economic news includes Treasury auctions on Tuesday, Wednesday and Thursday; weekly Jobless Claims report on Thursday; and not much else. There will be planned speeches, however, from five members of the Federal Reserve, including Richmond Federal Reserve President Jeffrey Lacker.
Fed President Lacker was the lone dissenting vote among voting FOMC members in each of last year’s policy votes.
Jan 4, 2013 | Housing Analysis
Home buyers continue to push the U.S. housing market forward.
In November, for the second straight month, the Pending Home Sales Index eclipsed its benchmark reading of 100, posting a value of 106.4.
The Pending Home Sales Index (PHSI) is published monthly by the National Association of REALTORS®. It tracks homes under contract to sell, but not sold. The PHSI is relative index, comparing current contract activity to the activity of 2001 — the first year for which “pending homes” were tallied for an index.
The Pending Home Sales Index has posted an average score of 100.2 from January 2012 through November 2012, the most recent month for which there’s data. This is a significant data point because it means that the 2012 housing market is performing better than the 2001 housing market; one which is widely considered a strong one for housing.
It’s also meaningful because it foreshadows a strong market for 2013. With an increasing number of homes under contract to sell, it can be assumed that “closed units” will increase in the future, too.
The National Association of REALTORS® says that 80% of U.S. homes under contract go to closing within 60 days, and that many of the remaining homes go to closing within days 61-120.
The monthly Pending Home Sales Index, therefore, can foreshadow to today’s buyers and sellers what’s ahead for the housing market.
The Pending Home Sales Index is a forward-looking indicator.
Based on November Pending Home Sales Index, we should expect to the home resale market to remain strong, and to pick up strength, through the first quarter of 2013. Demand for homes is high, mortgage rates are low, and buyers are looking to get a good deal.
The first few months of the year are often thought to be “slow” for the housing market. This year, however, that may not be the situation. If you’re actively looking for homes in Massachusetts , the best prices may be the ones you get this winter.
Jan 3, 2013 | Mortgage Rates
Mortgage rates moved higher Wednesday up congressional leaders voted to avoid the “Fiscal Cliff”.
Mortgage-backed securities (MBS) fell as investors bid up stock prices. Confidence among investors and consumers typically causes mortgage rates to rise. That’s what happened Wednesday.
For Thursday and Friday, expect jobs data to dictate where Worcester County area mortgage rates are headed.
The Federal Reserve has said that the national Unemployment Rate will dictate future monetary policy, with the central banker planning to raise the Fed Funds Rate from its target range near zero percent once joblessness falls to 6.5%. Currently, the jobless rate is 7.7 percent.
As the jobs market improves, equity markets should follow, causing mortgage rates to — again — move higher.
Thursday’s Initial Jobless Claims report has already influenced today’s mortgage rates. New claims rose 10,000 to 372,000 for the week ending December 29, 2012. This is slightly higher than Wall Street expected and mortgage bonds are moving better on the news.
Now, Wall Street turns its attention to Friday’s Non-Farm Payrolls report.
More commonly called “the jobs report”, Non-Farm Payrolls is a monthly publication from the Bureau of Labor Statistics, detailing the U.S. employment situation, sector-by-sector. The economy has added 4.6 million jobs since 2010 and analysts expect another 155,000 added in December 2012.
The Unemployment Rate is expected to tally 7.8%.
As more people get back to work, the nation’s collective disposable income rises, which gives a boost to the U.S. economy. Furthermore, more taxes are paid to local, state and federal governments which are often used to finance construction and development — two jobs creators in their own right.
Furthermore, as the ranks of the employed increase, so does the national pool of potential home buyers. With demand for homes high and rents rising in many U.S. cities, demand for homes is expected to grow. Home supplies are shrinking.
If you’re currently floating a mortgage rate, or wondering whether it’s a good time to buy a home, consider than an improving economy may lead mortgage rates higher; and an improving jobs market may lead home prices higher.
The market is ripe for a refinance or purchase today.
Jan 2, 2013 | Around The Home
Some natural disasters can be forecast — hurricanes, snow storms and, in some cases, flooding. Other disasters occur unexpectedly, such as tornadoes and earthquakes.
As a homeowner or renter in Worcester County area , it’s a safe idea to prepare for disaster or unexpected emergency. Every home should maintain a ready, working emergency kit for such a time.
Here are some items to include in your home’s emergency kit :
- Waterproof Container : Store items in a locking, plastic container
- Battery-Powered Radio : A small radio can receive weather updates and emergency broadcasts. Pack extra batteries, or use a hand-crank radio, instead.
- Light Source : Pack multiple flashlights and many spare batteries. LED flashlights are more expensive than “older” flashlights, but won’t lose battery power as quickly. Pack candles and matches, as well.
- Water : Pack bottled water, storing larger bottles in a cool, separate place. Add several bottles of sport drink for variety, if desired.
- Food : Pack non-perishable food such as canned fruits and vegetables; protein sources such as peanut butter or canned tuna; crackers and cookies; nuts and dried fruits. Remember to pack a can-opener, if needed. Include plastic utensils, if necessary.
- Blankets : At least two blankets should be packed. Consider packing multiple sets of clothes, for different temperatures and seasons.
- First-Aid Kit : A proper first-aid kit should include antiseptic, bandages, aspirin, an ace bandage, and allergy medicine for allergic reactions.
- Emergency Contact List : Include a list of your local utility companies; phone numbers at which to contact friends and loved ones; and, your primary care physician’s number.
After packing your emergency kit, make sure to store it in an easy-to-reach location away from power lines, power sources, and any place that may be “extra dangerous” during a crisis. For example, storing an emergency kit in a garage or a shed may be safer than storing it in a basement or in a bedroom closet.
In an emergency, a little bit of preparation can go a long way. Be prepared and be safe.
