Consumers may pursue home loans more fervently due to economic gains
Posted on Tuesday, February 5, 2013 at 3:27:19 PM
With economic conditions continually showing gradual improvement nationwide, American consumers considering buying a home may now be well-positioned to do so.
A report recently released by the U.S. Department of Labor detailed the addition of 157,000 new nonfarm jobs during January 2013. Large job gains were recorded in construction, healthcare, wholesale trade and retail trade. In addition, information disseminated by the Federal Home Loan Mortgage Corporation (Freddie Mac) outlined economic gain through a recent increase in mortgage rates.
Widespread gains in the labor market
According to the Labor Department, an average of 181,000 new positions were added during each month of 2012. In January 2013, jobs in the construction industry rose by 28,000, the healthcare industry saw more than 23,000 new jobs, the wholesale trade industry increased by 15,000 jobs and retail trade job numbers rose 33,000.
Unemployment numbers remained largely unchanged last month, staying at about 12.3 million, the Labor Department reported. Little change was also seen in employment rates for major industries during the month, including leisure and hospitality and government, financial activities and professional and businesses services. Increases in average hourly earnings this year have shown a 2.1 percent rise this year. Workers' wages on private nonfarm payrolls rose 4 cents to $23.78.
Mortgage rates continue to reflect economic improvement
Rates recently reported by Freddie Mac show 30-year fixed-rates increased slightly in the last week, to 3.53 percent from 3.42 percent. Average 15-year FRMs also rose, showing growth to 2.81 percent from 2.71 percent. The five-year treasury-indexed hybrid adjustable-rate mortgages averaged 2.70 percent, up from 2.67 percent the week prior. One-year treasury-indexed ARMs averaged 2.59 percent, up from 2.57 the week before.
Last week, 30-year FRMs averaged above 3.5 percent for the first time since the second week of September 2012. A record low was seen last year on November 21, when 3.31 percent was the average.
"Mortgage rates continued to trend upwards this week amid a growing economy led in part by the recovering housing market," said Frank Nothaft, vice president and chief economist of Freddie Mac. For instance, new home sales totaled 367,000 in 2012, the most in three years and reflected the first annual increase in seven years ... these factors helped residential fixed investment to add nearly 0.4 percentage points to real gross domestic product growth in the fourth quarter alone."
Rising home values, shrinking inventories and accessible mortgage rates make an advantageous housing market for potential homebuyers, and recent increasing job market figures may help to encourage them to pursue the path to homeownership more seriously in the following months.