May 2010 Jobs Report Gives A Temporary Boost To Home Affordability
On the first Friday of each month, the Bureau of Labor Statistics releases its Non-Farm Payrolls data from the month prior.
The release is more commonly called “the jobs report” — a major factor in mortgage rates and monthly payments.
Especially now.
With the recession officially over and growth returning to the U.S. economy, the recovery’s next frontier is jobs. As job growth increases, home affordability should take a hit. Here’s why:
- As the number of working Americans increases, so should total consumer spending
- As consumer spending increases, so should a return to risk-taking on Wall Street
- As risk-taking returns to Wall Street, bond markets should start to lose
Mortgage rates, therefore, should rise.
Furthermore, as the jobs market stabilizes and recovers, renters should be more apt to buy their first home, and homeowners should be apt to up-size. More home buyers in Tacoma means more competition for homes and higher home prices typically follow.
Job growth can be trickle-up for housing.
Today, however, the jobs data was not so strong. According to the government, 431,000 jobs were created in May, but of those new jobs, 95.4% represented temporary staffing for the 2010 Census. The number of private-sector jobs created fell well short of expectations and Wall Street is voting with its dollars right now. Mortgage bonds are gaining so, therefore, rates are falling.
The May 2010 jobs report may not reflect well on the economy, but home affordability in Washington and around the country is improving because of it.
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Job numbers in these reports are difficult to understand. What I mean is “how do these numbers impact mortgage rates, and the economy in general?”.
If there were 10,000 jobs created that paid $20,000 a year each, is that good? What about 5,000 jobs that paid $75,000 each a year? Obviously the 5,000 is a better shot in the arm to the economy.
In my opinion, the the report should list each salary or wage category and say how many jobs were created for each.
Just to give a headline saying that 400,000 new jobs were added is not good enough.