Just days ago, weekly jobless claims fell to another pandemic-era low as the enhanced benefits were phased off, the lowest historical level since the Covid-19 crisis began, a drop of 122,000 from the previous week.

Jobless Claims Fall Again As Enhanced Pandemic Benefits Fade Away

Last week, weekly jobless claims fell to another pandemic-era low as the enhanced benefits were phased off, sending fewer people to the unemployment line. The Labor Department reported Thursday that first-time unemployment insurance filings totaled 290,000 for the week ending October 16th, down 6,000 from the previous week. Claims fell below 300,000 for the second consecutive week. Continuing claims also declined to 2.48 million, the lowest level since the Covid-19 crisis began, a drop of 122,000 from the previous week. 

Both decreases are the lowest since March 14th, 2020, and come a month after most pandemic-related programs that provided enhanced or extended benefits came to an end. The data suggest that the United States is getting closer to its pre-pandemic labor market normal, though there is still a long way to go.

Construction Numbers Fall Back from August Levels

Single-family permits fell 0.9 percent from the previous month to 1.041 million units annually, down from 1.050 million in August. Permits for multifamily development (units in buildings with five or more units) declined 21.0 percent from August to 498,000 units in September 2020. Year-to-date (YTD), 1.303 million permits have been issued, a 22.7 percent increase over the 1.062 million allocated during the same period in 2020.

Construction starts declined by 1.6 percent in September to 1.555 million; this was 7.4 percent higher than the 1.448 million recorded in September 2020. Single-family starts remained flat at 1.080 million permits per year, down 2.3 percent from 1.105 million permits a year ago. Permits for multifamily housing were down 5.1 percent from August, but up 38.2 percent from a year ago, at 467,000 units.

Despite the poor September statistics, the first nine months of the year saw a total of 1.214 million starts, significantly ahead of last year; this is up 19.5% from the 1.016 million recorded at the same time in 2020.

By the end of September, there were 992,000 housing units completed, a 6.0 percent increase over the 935,800 units completed during the same period the previous year. Single-family completions are up 7.1 percent to 710,500, while multifamily completions are up 4.2 percent to 276,400. There were also 1.426 million residences under construction and a backlog of 250,000 construction permits.

Higher Mortgage Rates are a Risk for Borrowers Who Wait, Forecasts Say

On Wednesday, the Mortgage Bankers Association (MBA) said that total mortgage demand — including applications to refinance and purchase homes — decreased 6.3 percent from the previous week. Requests for housing loans fell 5%, while refinancing applications dropped 7% of the prior week and were 22% lower than the same period a year ago. According to the mortgage bankers’ weekly survey, the average rate on a 30-year fixed-rate mortgage hit 3.23 percent last week, the most since April. The average rate for a 15-year mortgage, popular among refinancing homeowners, has risen to 2.54%, the highest level since July.

Mortgage rates are still historically low, despite recent hikes. However, current reports show that they will continue to rise. Fannie Mae and Freddie Mac, the two largest mortgage companies, recently produced separate estimates indicating that 30-year mortgage rates will average in the mid-3% level next year. Meanwhile, according to a recent prediction, the Mortgage Bankers Association anticipates that rates will average 4% in 2022. Despite projections of increased rates, borrowing costs are still lower than before COVID-19, at least for the time being.

Next week’s potential market-moving reports are:

  • Monday, October 25th – No Report
  • Tuesday, October 26th – S&P Case-Shiller Home Price Index, New Home Sales
  • Wednesday, October 27th – No Report
  • Thursday, October 28th – Initial Jobless Claims, Continuing Jobless Claims, Pending Home Sales
  • Friday, October 29th – Consumer Spending, Employment Cost Index

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends.  I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at (800) 216-1047