Market Forecast: Job Openings, Mortgage Apps, and the Consumer Price Index

Blog posted On February 11, 2019

Mortgage rates trended slightly downward last week, following the Federal Reserve’s decision to slow down on interest rate hikes at the end of January.  The only significant housing report this week will be the weekly mortgage application survey.  Other market moving reports include job openings and the consumer price index. 

The Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) tracks job openings, hiring, and voluntary quits.  In a healthy labor market, workers are confident they will find comparable employment if they choose to quit their jobs.  In November, job openings dropped to a five-month low of 6.89 million signaling a tight labor market.  The quits rate remained at 2.3% indicating that confidence among workers is still strong.  Hiring fell slightly to a level of 5.71 million. 

The Mortgage Bankers Association (MBA) weekly mortgage application survey tracks week to week changes in new purchase and refinance mortgage application submissions.  For the week ending 2/1, new purchase applications declined 5.0% and refinance applications increased 0.3% for a composite decrease of 2.5%.  MBA economist, Joel Kan commented that despite the past week’s decline, “moderating price gains and the strong job market, including evidence of faster wage growth, should help purchase growth going forward.”

The consumer price index tracks changes in the costs of a fixed baskets of goods.  Core CPI strips out the more volatile food and energy costs and is used by the Federal Reserve to evaluate inflationary trends.  In December, the consumer price index declined 0.1% month-over-month and increased 1.9% year-over-year.  Excluding food and energy costs, the index is up 0.2% month-over-month and 2.2% year-over-year.  The decline was driven by a sharp drop in oil prices and was in line with the Federal Reserve’s expectations. 

The strength of the labor market and inflation each influence the housing market.  In a strong labor market, workers have the income needed to support high-dollar purchases and secure mortgage financing.  The inflation rate influences the way the Federal Reserve approaches interest rate policy.  If the Federal Reserve does slow down on raising interest rates this year, we can expect to see steady mortgage rates.  Even after last year’s four interest rate hikes, the average mortgage rates are low by historic standards.

Sources: Bloomberg, CNBC, Econoday, MarketWatch, Mortgage News Daily