After weaker jobs report, NAR predicts lower mortgage rates ahead

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While the average mortgage rate has fallen slightly over the last several weeks, a weaker jobs report has sparked real estate industry optimism of even lower rates ahead. 

U.S. hiring slowed substantially last month, with a-fewer-than-expected 114,000 jobs added and the unemployment rate rising to 4.3 percent, the highest since the COVID lockdown. 

The disappointing jobs report has economic observers predicting that the Federal Reserve will cut interest rates next month, which would also likely lower mortgage rates to help buoy a flagging housing market. 

“Mortgage rates are plunging on the news of weak job growth and rising unemployment. The 4.3 percent unemployment rate is the highest since coming out of the COVID lockdown and higher than the 3.5 percent unemployment rate right before the COVID-19 arrival. The hourly wage gain of 3.2 percent is the weakest in three years,” National Association of Realtors Chief Economist Lawrence Yun said in a written statement. “The Fed was late moving away from the restrictive monetary policy stance when early signs of a softening economy were visible. Soft manufacturing survey data, falls in construction activity, and damaging financing costs for small businesses clearly hint at a cooling economy and further cooling in inflation.” 

Yun said that the Fed may make a deeper cut of 50 basis points in September. 

“The 30-year fixed mortgage rate looks to fall to 6.5 percent or even lower in the upcoming weeks. That is what the 10-year bond yield suggests, which plunged to 3.8 percent this morning, compared to 4.8 percent a few months ago,” Yun said. “The 100-basis-point change in mortgage rates generally means around a $300 lower payment on a typical mortgage. Homebuyers who were priced out a few months ago should re-check whether they can enter the homebuying market if they have secure jobs.” 

As of Friday, the average interest rate for a 30-year fixed mortgage in New York is 6.82 percent, according to Bankrate.com.