Current US Unemployment Rate & Forecasted Mortgage Rates in 2023

Examining Employment Statistics & the Impact on Mortgage Rates

Statistics From the Previous Housing Cycle Compared to the Current Cycle

When considering fluctuating mortgage rates, it’s important to note the aspects of the economy that can influence mortgage rates. One of these factors that we will discuss in depth today is the unemployment rate, and the job market as a whole. As it stands currently, the average 30-year fixed rate across the nation is at 6.52% according to Bankrate.com.

The Current US Job Market

The statistic everyone is most curious about when it comes to the job market is of course the current unemployment rate. As it stands at the time of writing this, the unemployment rate is at a historically low 3.5%, according to Lawrence Yun, the Chief Economist for the National Association of Realtors. In addition to this low unemployment rate, there have been 223,000 new jobs added in the past month, 4.5 million in the past year, and 11.2 million in the past two years.

Another important statistic that many look to as a sign of how the labor market is faring is wage growth. Over the last year, wage growth is at 4.6%. It is important, however, to compare this growth with the increase in inflation, which has been rampant in the past, causing the Federal Reserve to raise its benchmark interest rates repeatedly in the past year to combat this rise. The inflation rate in November 2022 was at 7.1% according to usinflationcalculator.com, meaning that overall, workers were still feeling the strains of the current economy, even through a substantial increase in jobs and moderate gains in wage growth.

How Does the Labor Market Impact Mortgage Rates?

Simply put, the labor market impacts the rise and fall of mortgage rates through supply and demand, and the ability of workers to afford the median-priced home. When there is a significant amount of workers with jobs that can afford to buy homes, mortgage rates will be impacted, and vice versa. Yun had this to say about the labor market’s impact on housing,

Job additions will be critical in generating fresh housing demand as mortgage rates show signs of stabilization. Housing affordability remains a challenge for those renters considering buying a home. More homes, therefore, need to be built to ensure more supply and lessen the upward pressure on home prices and apartment rents.

Additionally, according to an article by Nadia Evangelou, Senior Economist and Director of Forecasting for the National Association of Realtors, 32% of all households and 15% of all renters are currently able to afford to buy a median-priced home. 

Thankfully, NAR is forecasting that mortgage rates will stabilize throughout the year and eventually fall down below the 5% mark toward the end of the year, as illustrated by this graphic.

How Does the Current Job Market Compare With the Previous Housing Cycle?

With all of the recent talk about mortgage rates, and the housing market as a whole, many are wondering if we are headed towards a similar situation to the Great Recession, or if it is already happening. When looking at the conditions of the economy in ‘08 and what is occurring today, there are some clear differences between the two economies. The graph below provided by NAR illustrates these differences.

Looking at the data, it’s important to note that the Great Recession was marked by a significant cut in jobs, and a significantly lower amount of total jobs throughout the economy as a whole. When you look at the data on our current labor market, it’s clear that we are in a much stronger position than before and during the Great Recession. Additionally, when looking at the differences between the economies as a whole, it’s important to note the difference between inventory on the market, and the mortgage delinquency rates, as these have a strong impact on mortgage rates.

How the Ask Cathy Marketing Group Can Help You Navigate This Market

If you are wondering if you are in a position to buy a home in the near future, or you aren’t sure and want to talk the process over with a professional, contact us here at the Ask Cathy Marketing Group for your complimentary consultation. We have been buying and selling homes in Kansas City for over 20 years, and we have seen every kind of market. We will work with you to develop a homebuying or selling plan that revolves around your needs. Our Realtors are constantly researching and staying up to date on the current market, to make sure they are able to guide their clients through the current market and WIN! You can contact us by filling out the form below, or by calling us at (816)-268-4033!

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