After dropping to the lowest level in decades last week, mortgage rates fell even further this week. Weak economic data from the US, Europe, and China caused investors to question the pace of the global economic recovery. Slower economic growth was positive for mortgage rates and negative for the stock market.
Friday's important Employment report reflected a slowly improving labor market. The economy lost -125K jobs in June, which was very close to expectations. The figures include a loss of -225K census workers who completed their temporary assignments. The private sector added 83K jobs. The Unemployment Rate fell to 9.5% from 9.7% in May, but this was due to 650K people leaving the labor force. The labor force consists of everyone in the US who either has a job or is looking for one, and the Unemployment Rate measures the percentage of the labor force without jobs.
There was mixed news in the housing sector this week. May Pending Home Sales declined 30% from April, as many buyers rushed to sign contracts ahead of the April 30 deadline to qualify for the home buyer tax credit. On a more positive note, the "close-by" deadline for the home buyer tax credit has been extended to September 30. Although the tax credit is not available for new contracts signed after April 30, extremely low mortgage rates and high home affordability levels make conditions very favorable for home purchases.
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