Revised Labor Data, Sluggish Home Sales, and Mortgage Application Drop Impact Major Sectors: Portafolio Capital Markets Recap for Week Ending 8/23/2024
Revised Labor Data Shows U.S. Economy Added 818,000 Fewer Jobs, Raising Concerns About Market Strength
The U.S. economy added 818,000 fewer jobs than initially reported in the 12 months ending in March 2024, according to the Labor Department's revised data. This adjustment, part of the Bureau of Labor Statistics' annual benchmark revisions, indicates that job growth during the period was nearly 30% lower than previously estimated, marking the most significant downward revision since 2009. The revisions suggest that monthly job gains averaged 174,000, down from the originally reported 242,000. Despite the continued job creation of over 2 million positions, the data implies a weaker labor market, potentially influencing the Federal Reserve's decision to cut interest rates in September. The largest downward revisions occurred in the professional and business services, leisure and hospitality, and manufacturing sectors. Federal Reserve officials are closely monitoring the labor situation, with Chairman Jerome Powell addressing the implications in his Jackson Hole speech Friday morning.
The press release by the Bureau of Labor Statistics can be found here.
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Existing-Home Sales See Modest July Increase, But Market Remains Sluggish
In July, U.S. existing-home sales saw a slight uptick, ending a four-month decline, as reported by the National Association of REALTORS®. Sales rose 1.3% from June to an annual rate of 3.95 million, although they remain 2.5% lower than a year ago. The Northeast and West regions showed year-over-year gains, while the Midwest and South lagged behind. Despite the improvement, NAR Chief Economist Lawrence Yun noted that the market remains sluggish, though buyers are benefiting from increased choices and better affordability due to lower interest rates. Inventory levels rose nearly 20% from the previous year, but homes stayed on the market longer, averaging 24 days. While single-family home prices increased, the condominium market underperformed, partly due to rising maintenance and insurance costs.
The full press release by the National Association of Realtors (NAR) can be found here.
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Mortgage Applications Drop 10.1% Amidst Stabilizing Rates, Refinance Activity Also Declines
Mortgage applications fell by 10.1% in the week ending August 16, 2024, according to the Mortgage Bankers Association (MBA). The decline in applications was driven primarily by a 15% drop in refinance activity, even as the average 30-year fixed mortgage rate decreased for the third consecutive week to 6.5%, the lowest since May 2023. Despite this decline, refinance applications remain 23% higher than a month ago, with recent weeks showing the strongest activity since 2022. Purchase applications also decreased by 5%, marking the lowest level since February 2024, as homebuyers appear to be more selective due to rising inventory. The share of adjustable-rate mortgage (ARM) applications decreased, while FHA refinance applications rose for the sixth consecutive week. Overall, the mortgage market shows signs of stabilization following recent financial market volatility.
The full press release by the Mortgage Bankers Association (MBA) can be found here.
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