Economists' Outlook

Housing stats and analysis from NAR's research experts.

Instant Reaction: Jobs, September 3, 2021

“The jobs recovery in August was light with only 235,000 more jobs. From the cyclical low point during the total lockdown in April 2020, 17 million jobs have been recovered. Still, another 5 million is needed to just reach back to the prior peak right before the pandemic. The latest unemployment rate was 5.2% with wages rising by 4.8% over the year. Consumer price inflation of 5.2% is eating away at those wage gains. There were fewer construction jobs involving commercial real estate while residential sector added jobs to relieve the housing shortage.

The key question is what will the Federal Reserve do? The inflation rate is picking up. Help Wanted signs are at a record high. The first act will be to “taper” off cutting back buying mortgage backed securities, which could occur before the year end. That means consumer mortgages that are sold to Fannie and Freddie will need to find other buyers, like Wall Street, Chinese government, and German mutual funds. That will lead to an uptick in mortgage rates. Moreover, the Fed will raise its short-term interest rates from 2022, which will further raise mortgage rates next year.”