CCL Market Update: April Employment Report, Consumer Comfort, Mortgage Rates

The April employment report was released on Friday, and the numbers were mixed. Employers added 223,000 jobs last month, the Labor Department reported, and the unemployment rate edged down slightly to 5.4% in April from 5.5% in March. The construction sector saw an impressive 45,000 rise in payroll jobs, which may point to acceleration for construction and new housing within the next couple of months. Another impressive sector was professional business services, which added 62,000 jobs in the month of April. Workers in both government and non-government industries reported greater hiring activity last month.

April job creation was a turnaround from the disappointing performance in March, initially reported as a modest 126,000 gain and then revised down on Friday to just 85,000. There were also quite a few layoffs in April. The Challenger Job-Cut Report showed that the number of layoff announcements for the month came in at 61,582, up significantly from 36,594 in March, and from 40,298 in April of last year. The highest percentage of layoffs came from the energy sector, totaling 19,745 for the month.

Jobless claims for the week ending May 2 came in lower than expected at 265,000, up slightly from 262,000 the previous week, but sizably lower than the 296,000 reading in the April 18 week—the sample week for the April employment report. The 4-week average for initial claims dropped 4,250 to 279,500, a 15-year low.

The Bloomberg Consumer Comfort Index fell 1 point in the May 3 week to 43.7. Americans’ optimism toward the economy is at a 3-month low, and the buying climate is at a 6-week low. The weakest economic outlook is mainly among people making less than $15,000 a year, where sentiment is the lowest in more than 4 years. Although the Fed stated that consumer confidence “remains high” in the most recent FOMC announcement, this report is nearing the weakest readings in a year.

SLO County Real Estate

The spring home-buying season is heating up in San Luis Obispo County! The local housing market showed strong year-over-year gains across all metrics in March. According to CoreLogic, the total number of homes sold in March increased 23.3 percent from 296 units to 365 units. New home sales increased 14.6 percent. The overall median home price increased 4.5 percent from $465,000 to $485,750.

Mortgage Rates

Local mortgage rates have displayed moderate increases once again. Within the conventional loan programs, the largest increase was seen in the 30-year fixed conventional program, which went from 3.750% (3.794% APR) on April 29 to 3.875% (3.928% APR) on May 6, a bump of more than 1/8 of a percent-point. This takes the 30-year fixed program back to levels not seen since the March 10 week of this year, which presented a rate of 3.875% (3.915% APR). The only drop within the conventional loan programs was seen in the 15-year fixed, which decreased by 1/8 of a percent-point, returning to the 3.125% (3.195% APR) rate from the April 22 week.

Within the government loan programs, all loan programs saw increases ranging from 14 to 166 basis points, with the exception of the 30-year FHA program, which remains unchanged for the 10th consecutive week.

Freddie Mac’s Primary Mortgage Market Survey released on May 7 reported increases for both the 15-year and 30-year fixed loan programs. The 15-year fixed-rate mortgage averaged a rate of 3.02%, up from the previous week’s average of 2.94%. The 30-year fixed-rate mortgage averaged a rate of 3.80%, up from the 3.68% average the previous week. Although this is nearing 2015 highs for rates, the 30-year fixed rate is still significantly lower than the same time last year, which came in at an average of 4.21%.

While rates remain below year-ago levels, consider contacting the Mortgage Experts for your home purchase or refinance! Give us a call at 805.543.LOAN to discuss your mortgage options and to get a free rate quote.