Blog posted On November 05, 2018
Election Day is tomorrow, don’t forget to exercise your right to vote in the 2018 Midterm Elections! Election results sometimes influence economic markets, so rates may experience some volatility this week. The Federal Open Market Committee (FOMC) meets Wednesday and Thursday and will release a statement Wednesday afternoon. It will be a slow week for housing news, the only directly-related housing report will be the Mortgage Bankers Association (MBA) weekly mortgage application survey on Wednesday. Other market-moving reports include the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) on Tuesday.
The Labor Department’s Job Openings and Labor Turnover Survey is a collection of reports detailing the monthly change in job openings, hirings, and voluntary quits. When the labor market is strong, US workers are confident that if they choose to change jobs, they will find comparable employment. In August, job openings hit an all-time high, rising to a level of 7.14 million. The hiring rate also reached a record of 5.78 million. The rise in the voluntary quit rate shows workers are confident in today’s job market. ZipRecruiter labor economist Julia Pollak stated, “the fact that record numbers of workers are voluntarily quitting their jobs suggests that they are finding substantially better opportunities elsewhere in the economy.”
The MBA weekly mortgage application survey tracks week to week changes in new purchase and refinance mortgage applications. For the week ending 11/2, new purchase applications declined 2% and refinance applications declined 4% for a composite decrease of 2.5%. MBA economist, Joel Kan commented, “purchase applications have been adversely impacted by the recent uptick in rates and the significant stock market volatility we have seen the past couple of weeks.”
The FOMC will meet on Wednesday adn Thursday for its second-to-last semiannual monetary policy meeting of the year. The FOMC is not expected to raise interest rates following this meeting, with most markets pricing in a fourth rate hike following the December meeting. Federal Reserve Chair Jerome Powell has faced some criticism from President Trump in recent months. Trump commented, “Every time we do something great, he raises the interest rates, almost looks like he’s happy raising interest rates.” After years of near-zero interest rates, the FOMC started gradually raising interest rates at the end of 2016. The FOMC raises interest rates to curb inflation based on economic growth.
A strong labor market typically translates into housing market activity, since gainfully employed consumers are able to finance high-cost purchases like homes. Heading into the end of the year, home buying and selling tends to slow down, however it could be the most opportune time for some home buyers to make a move. With less buyers on the market, sellers may be more willing to offer concessions to home buyers or be more flexible with price negotiations.