All Factors Leading to FF Rate Hike
Rising up ... did my time, took my chances."
Survivor. The November Jobs Report
went the distance to show the labor force is back on its feet. And, the Fed no
doubt had its eye on the data in preparation for the upcoming Federal Open
Market Committee meeting.
November jobs creation exceeded expectations while September and October numbers both were revised higher. Hourly wages increased. The Unemployment Rate held steady at 5 percent, a 7-year low. Finally, the Labor Force Participation Rate, which tracks working-age Americans who are employed or at least looking for a job, ticked up slightly to 62.5 percent from the near 38-year low of 62.4 percent.
Based on this report, all bets are currently on a near 80 percent chance the Fed will increase the Fed Funds Rate when it meets December 15 and 16. This rate, which has been near zero for almost a decade, is the rate at which financial institutions lend money to each other overnight. When it increases, additional rates could follow based on other activity in the markets and the economy.
Home prices also continue to see healthy gains, which bodes well for home sellers. CoreLogic, a consumer, financial and property information and analytic firm, reported that home price gains, including distressed sales, rose 6.8 percent from October 2014 to October 2015. Low inventory and high demand continue to drive prices up, and CoreLogic forecasts a 5.2 percent increase from October 2015 to October 2016.
While home prices are making up for lost ground, they lag behind a decade ago. The median sales price of existing homes sold nationwide in October 2015 was $219,600, compared to $229,000 in October 2005, according to the National Association of REALTORS®. Meanwhile, home loan rates remain in attractive territory for those looking to purchase or refinance.
The bright side to the recent disappointing reports is that home loan rates remain near historic lows, making now a great time to consider a home purchase or refinance. Let me know if I can answer any questions at all for you or your clients.
November jobs creation exceeded expectations while September and October numbers both were revised higher. Hourly wages increased. The Unemployment Rate held steady at 5 percent, a 7-year low. Finally, the Labor Force Participation Rate, which tracks working-age Americans who are employed or at least looking for a job, ticked up slightly to 62.5 percent from the near 38-year low of 62.4 percent.
Based on this report, all bets are currently on a near 80 percent chance the Fed will increase the Fed Funds Rate when it meets December 15 and 16. This rate, which has been near zero for almost a decade, is the rate at which financial institutions lend money to each other overnight. When it increases, additional rates could follow based on other activity in the markets and the economy.
Home prices also continue to see healthy gains, which bodes well for home sellers. CoreLogic, a consumer, financial and property information and analytic firm, reported that home price gains, including distressed sales, rose 6.8 percent from October 2014 to October 2015. Low inventory and high demand continue to drive prices up, and CoreLogic forecasts a 5.2 percent increase from October 2015 to October 2016.
While home prices are making up for lost ground, they lag behind a decade ago. The median sales price of existing homes sold nationwide in October 2015 was $219,600, compared to $229,000 in October 2005, according to the National Association of REALTORS®. Meanwhile, home loan rates remain in attractive territory for those looking to purchase or refinance.
The bright side to the recent disappointing reports is that home loan rates remain near historic lows, making now a great time to consider a home purchase or refinance. Let me know if I can answer any questions at all for you or your clients.
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