The Job Openings and Labor Turnover Survey (JOLTS) for March was recently released, and it reported that the number of job openings fell by 2.9% to 4.994 million in the month, coming in below the consensus estimates. The hiring rate for March held steady at 3.6%, while the quits rate rose by 1-tenth to 2.0%. Judging by their apparent willingness to quit jobs, workers seem to be fairly confident in the labor market.
Current jobless claims are also signaling healthy conditions in the labor market. Initial claims for the week of May 9 fell by 1,000 to 264,000, below the consensus estimate of 276,000. This is the 3rd consecutive week that initial claims are in the low 260,000 range, one of the best runs on record. The 4-week average is also down, with a steep decline of 7,750 to a 271,750 level – the lowest level for this average since April 22, 2000 when it was 266,750. This movement continues to point to strength for the May employment report.
The Bloomberg Consumer Comfort Index reported a slight decrease from 43.7 to 43.5 in the week of May 10, which is still considered a strong level.
Consumers may be comfortable but it still is not translating to strength for consumer spending. Retail sales were unchanged in April, below expectations for a 0.2 percent gain. The surprising part of the report is the weakness in some of the core readings including department stores which fell a very steep 2.2 percent and electronics & appliances which fell 0.4 percent for a 7th straight decline. Both furniture and food & beverages also show declines. April really was a soft month for the economy, not offering much punch at all following the depressed first quarter.
This week will bring reports on the housing sector, including the housing market index, housing starts, and existing home sales, as well as the release of the Federal Open Market Committee meeting minutes and the latest reading of the Consumer Price Index, the primary gauge for inflation.
Central Coast Real Estate 2015: First Quarter Update
The San Luis Obispo County real estate market is going strong to begin 2015, up slightly from 2014’s numbers. The SLO County median home price for the first three months of 2015 came in at $500,000 vs. $485,000 for the first three months of 2014, a slight increase of approximately 3%.
So far this year, the most affordable city here in the Central Coast is Santa Margarita, around 12% cheaper than Oceano, which came in as the 2nd most affordable city.
Mortgage News & Rates
Freddie Mac’s Primary Mortgage Market Survey released on May 14 reported increases for both the 15-year and 30-year fixed loan programs. The 15-year fixed-rate mortgage averaged a rate of 3.07%, up from the previous week’s average of 3.02%. The 30-year fixed-rate mortgage averaged a rate of 3.85%, up from the 3.80% average the previous week. This is the third week straight that national mortgage rates have increased. Although rates are nearing 2015 highs, the 30-year fixed rate is still lower than the same time last year, which came in at an average of 4.20%.
As rates edge higher, the demand for both purchase and refinance mortgage applications seem to be declining. According to the Mortgage Bankers Association, purchase application volume fell by 0.2% and refinance applications fell steeply by 6.0% in the week of May 8.
Local mortgage rates decreased over the past week, some returning to close to the same levels seen two week prior. The largest decrease was within the Jumbo program, which dropped by nearly 1/8-point to 3.875% (3.915% APR), followed closely by the FHA Manufactured. All other decreases ranged between 2 and 22 basis points down. The 30-year FHA has remained stagnant once again at 3.250% (4.825% APR) for the 11th straight week. The only increase was seen in the 15-year fixed program, which jumped 139 basis points, going from 3.125% (3.195% APR) on May 6, to 3.250% (3.344% APR) on May 13.