Author: Eric BernsteinPublished:
Labor market data DOMINATED the week in the best way possible for homebuyers. While the labor market isn't a total trainwreck, it is cool enough to give most financial analysts comfort that a third rate cut is ~almost~ a sure thing. There's just one last report standing in our way....
The average rate on a 30-year fixed rate conventional loan dropped to 6.56%, which is almost a quarter point lower than we were just 2.5 weeks ago on November 20th! Remember, the faster we drop, the faster buyers will start coming back off the sidelines (again).
Sign up for our weekly Friday rate texts to see all the great options LendFriend provides to homebuyers! We had a buyer lock in a 5.99% with no points on a 30-year conventional loan last week!
Jobs Data Points To Rate Cut
The jobs data has been on a rollercoaster ride in the last few months. We saw dangerously bad data in July and August followed by unbelievably (and I mean unbelievably) high numbers in September. October numbers were clouded by strikes and natural disasters. So - everyone was eager to see what November was going to look like. Positive numbers would be a BIG negative sign for mortgage rates.
Fortunately for homebuyers, we saw a labor market that didn't rebound from October that much. In fact, in some ways, the data was EVEN WORSE than October. Here's a quick recap:
- Job Openings grew to 7.74M in October (more than the 7.45M expected) BUT hirings fell off a cliff last month. There were 1.11 job openings for every unemployed person in October, below the 1.2 that prevailed before the COVID-19 pandemic.
- Private payrolls growth was less than expected in November. Companies added just 146k jobs on the month, below the downwardly revised 184,000 in October (initially reported at 223k HA) and less than the Dow Jones estimate for 163,000. ADP’s chief economist, Nela Richardson, said. “Manufacturing was the weakest we’ve seen since spring. Financial services and leisure and hospitality were also soft.” This was the biggest gut punch to mortgage rates on the week.
- Finally, the Jobs Report on Friday also had mixed data. On one hand, nonfarm payrolls increased by 227k (above the 214k expected) and October and September numbers were revised upward. On the other hand, the unemployment rate ticked up to 4.2% and a broader measure that includes discouraged workers and those holding part-time jobs for economic reasons moved slightly higher to 7.8%.
Keep in mind, while the Fed is being very cautious with current policy, the Fed doesn't need or want to see the labor market fall apart before cutting rates further right now. As long as we are steadily along the same lines that we were pre-COVID and inflation isn't ticking up, the Fed will be encouraged to continue to cut rates.
Trump Will Not Try To Replace Powell
At least for now... In an exclusive interview with Meet the Press, Trump stated that he has no plans to replace Powell when returning to office.
Powell also said last week that he expects to have a good relationship with the new Trump Administration.
It's nice to see these 2 getting along and the markets also LOVE that type of stability at the top, which is another reason we saw rates continue to fall last wee.
One last hurdle before Cut #3!
And it's a big one! CPI data reports this week. If November holiday shopping wasn't as hot as expected, all signs will point to a rate cut on December 18th.
After last week, the market is fully expecting another rate cut on December 18th. Chances have shot up to 87.1% right now (up from 62% last week).
The average rate on a 30-year fixed rate conventional loan dropped to 6.56%, which is almost a quarter point lower than we were just 2.5 weeks ago on November 20th! Remember, the faster we drop, the faster buyers will start coming back off the sidelines (again).
Sign up for our weekly Friday rate texts to see all the great options LendFriend provides to homebuyers! We had a buyer lock in a 5.99% with no points on a 30-year conventional loan last week!
Jobs Data Points To Rate Cut
The jobs data has been on a rollercoaster ride in the last few months. We saw dangerously bad data in July and August followed by unbelievably (and I mean unbelievably) high numbers in September. October numbers were clouded by strikes and natural disasters. So - everyone was eager to see what November was going to look like. Positive numbers would be a BIG negative sign for mortgage rates.
Fortunately for homebuyers, we saw a labor market that didn't rebound from October that much. In fact, in some ways, the data was EVEN WORSE than October. Here's a quick recap:
- Job Openings grew to 7.74M in October (more than the 7.45M expected) BUT hirings fell off a cliff last month. There were 1.11 job openings for every unemployed person in October, below the 1.2 that prevailed before the COVID-19 pandemic.
- Private payrolls growth was less than expected in November. Companies added just 146k jobs on the month, below the downwardly revised 184,000 in October (initially reported at 223k HA) and less than the Dow Jones estimate for 163,000. ADP’s chief economist, Nela Richardson, said. “Manufacturing was the weakest we’ve seen since spring. Financial services and leisure and hospitality were also soft.” This was the biggest gut punch to mortgage rates on the week.
- Finally, the Jobs Report on Friday also had mixed data. On one hand, nonfarm payrolls increased by 227k (above the 214k expected) and October and September numbers were revised upward. On the other hand, the unemployment rate ticked up to 4.2% and a broader measure that includes discouraged workers and those holding part-time jobs for economic reasons moved slightly higher to 7.8%.
Keep in mind, while the Fed is being very cautious with current policy, the Fed doesn't need or want to see the labor market fall apart before cutting rates further right now. As long as we are steadily along the same lines that we were pre-COVID and inflation isn't ticking up, the Fed will be encouraged to continue to cut rates.
Trump Will Not Try To Replace Powell
At least for now... In an exclusive interview with Meet the Press, Trump stated that he has no plans to replace Powell when returning to office.
Powell also said last week that he expects to have a good relationship with the new Trump Administration.
It's nice to see these 2 getting along and the markets also LOVE that type of stability at the top, which is another reason we saw rates continue to fall last wee.
One last hurdle before Cut #3!
And it's a big one! CPI data reports this week. If November holiday shopping wasn't as hot as expected, all signs will point to a rate cut on December 18th.
After last week, the market is fully expecting another rate cut on December 18th. Chances have shot up to 87.1% right now (up from 62% last week).
Key reporting dates this week:
Mon, 12/9: Wholesale inventories
Tues, 12/10: NFIB optimism index
Wed, 12/11: Consumer price index, Monthly U.S. federal budget
Thurs, 12/12: Initial jobless claims, Producer price index
Fri, 12/13: Import price index
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About the Author:
Eric Bernstein is the President and Co-Founder of LendFriend Mortgage, where he helps homebuyers make smarter, more confident decisions in today’s fast-moving housing market. With over a decade of experience guiding hundreds of clients—from first-time buyers to seasoned investors—Eric brings a mix of market insight, strategy, and personalized service to every mortgage transaction. Each week, Eric breaks down the housing and economic headlines that matter, giving readers a clear, no-fluff view of what’s happening and how it might impact their buying power.