Despite some concerns about an impending recession, unemployment rates remain low, which presents a mixed scenario for the housing market. In March, the U.S. saw the addition of over 300,000 jobs, as reported by the Labor Department, reducing the unemployment rate to 3.8% from February’s 3.9%.
This low unemployment rate is generally beneficial for the housing market, as individuals are less inclined to purchase homes if they are unemployed or fear potential layoffs. On the flip side, this scenario might prompt the U.S. Federal Reserve to delay cutting interest rates as it aims to reduce inflation to its 2% goal. Consequently, this could maintain higher mortgage rates for an extended period. Although mortgage rates are distinct from the Fed’s rates, they tend to follow a similar direction.
According to Freddie Mac, mortgage rates averaged 6.82% in the week ending April 4, showing a decrease of about one percentage point from the fall, when rates were approaching 8%. However, this rate is still significantly higher than the high 5% to low 6% range that many homebuyers, already grappling with elevated prices and intense competition for a limited housing supply, had hoped for this spring.
This scenario may pose a challenge for buyers as the housing market commences in earnest across the U.S., contrasting with regions like ours where the market begins to decelerate. Those who choose to wait may discover a greater availability of homes. The construction industry saw the addition of approximately 39,000 workers in March, anticipated to result in an increased number of homes being constructed at a crucial time when there is a dire need to alleviate the housing shortage.