September Jobs Report Delivers Mixed Signals to U.S. Housing Market

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The U.S. economy added 156,000 jobs in September 2016, a lower than expected number, the Labor Department reported this past Friday. It was the next-to-last checkup on the job market before Election Day. The unemployment rate also ticked up to 5% from 4.9%.

So what does this mean for the U.S. housing market?

According to NAR's Chief Economist Lawrence Yun, "The latest jobs report shows softening monthly trend with 156,000 net new jobs in September 2016. Given no major surprise in the data, the national outlook for real estate market remains essentially unchanged, with home sales expected to squeak out slight gains in 2016 and 2017 while commercial building vacancy rates should continue to fall."

Yun continued, "With this data to be digested before the coming election, we should note that men have been underperforming as 68.4% of adults have jobs, down from historic norm of around 75%. Meanwhile, 55.8% of women have jobs, roughly matching the historic norms. Furthermore, among men, those with a college degree 72% of adults are working while only 54% of those with only a high school degree are working. There will surely be a big divergent voting patterns among men versus women and among those with college education and those without in November."

Realtor.com's chief economist Jonathan Smoke also commented last Friday, "Today's numbers were strong enough to keep a rate hike from the Federal Reserve likely before the end of the year, and we are already seeing mortgage rates move in that direction. That's both bad and good: Higher mortgage rates will make buying a home more expensive, but they will also likely make home loans accessible to more prospective buyers - a problem that has plagued the market for years."

"The current level of job creation should lead to continued strong household formation, which will keep demand for homes high. And as long as rates move gradually, consumers will be able to mitigate some of the effects of the rate uptick by shifting to a different mix of shorter fixed-rate term products and buying discount points.  In the short term, demand could be boosted by those consumers most concerned about higher rates moving up their plans", concluded Smoke.