Private payrolls added 165,000 hires in April and the unemployment rate fell to 7.5% from 7.6% in March. The news was received as generally positive. Stocks shot up. On Friday, the S&P 500 rose above 1,600 and the Dow set another record high, breaking 15,000 for the first time.
March hiring numbers were revised upward by 50,000 (to 138,000), which is especially positive in contrast to the “dismal” initial reading of 88,000. Payrolls added 64,000 more jobs in February. For more on the April employment report, read HERE.
Construction jobs actually fell 6,000 in April after averaging 27,000 a month for the previous six months, according to the Bureau of Labor Statistics. Then there was this tweat from Trulia chief economist Jed Kolko:
Unemployment for construction workers still high at 13.2% — but down from 21.8% in April 2010. Was 6.9% in April 2006.
— Jed Kolko (@JedKolko) May 3, 2013
Still, residential construction seems to be doing better than other sectors of construction. Buoyed by the recent real estate market gains, residential construction employment actually rose by 6,200 jobs in April – up 4.1% yearly – which, notes the Housing Wire, is well above the national pace of 1.6%. For more on construction activity in 2013, read HERE.
Mortgage rates spiked on Friday, May 3 after the employment news and have remained elevated through the weekend to May 6. The movement came as a sharp reversal to the almost uniform downward shift in mortgage rates throughout the past month.
The most recent upward movement erased some of the gains seen in April. The 30-year fixed, for example, hovered around 3.38% at the end of March, dropped to 3.22% by the end April, and has since moved up to 3.261%.
Famed investor Warren Buffett mentioned in a recent interview that bonds are a “terrible” investment, with artificially high prices due to Federal Reserve intervention. This built-in source of demand has been a boon for mortgage rates, and as long as the Federal Reserve remains in the market, we expect rates to remain historically low. The Fed has said that it is targeting an unemployment rate of 6.5% before it leaves the market, and after the most recent report (7.5%), we still have a ways to go. For now, mortgage rates will help housing remain extremely affordable.
We have posted the April mortgage rate movement graphs alongside the May 6 rate update. Click HERE to keep reading.