The August jobs report keeps the probability of the Fed hiking interest rates in September very low. That could be promising for homebuyers watching for mortgage rates to come down.
This week’s jobs report is seemingly weak at first blush, but it’s actually fairly good news for homebuyers waiting for mortgage rates to come down. The U.S. added 187,000 jobs in August, in line with expectations. Unemployment jumped significantly, from 3.5% in July to 3.8% in August. That may alarm people, but the jump is mostly due to more people looking for jobs, not more people losing their jobs.
Wage gains slowed, with average hourly earnings up 0.2% from a month earlier and 4.3% from a year earlier. That’s slightly weaker than expected, and a sign that the labor market is gradually cooling, which is one goal the Fed was trying to accomplish by hiking interest rates. Combined with weak JOLTS data released earlier this week, this has the potential to bring down interest rates–and mortgage rates–but it doesn’t necessarily mean the U.S. is headed toward a recession.
There’s a very low probability of the Fed hiking rates at their September 20 meeting, and this jobs news should keep that probability low. The Fed will also take into account the August CPI report, which will be released September 13.