The first Friday of every month is like a Rorschach test this year — people look at the employment numbers from the U.S. Labor Department and make what they want of it.
Optimists say that with 71,000 net jobs created by private industry, the employment picture is starting to see those actual “green shoots” that economists promised last summer, but never took root. (Overall, the economy shed 131,000 jobs in July 2010).
Pessimists point out that 71,000 jobs isn’t half what the U.S. economy needs to propel the gross domestic product. And most economists say we need to see at least 150,000 jobs to keep up with population growth and boost economic productivity. They say we’re head for a dreaded “double-dip” recession, where negative economic growth will once again grip the country.
Either way, it’s hard to make a case for the kind of growth that will force interest rates upward, and make borrowing money for a new home more expensive. Mortgage rates once again are low this week, while demands for mortgage loans remain so low there’s no real impetus to move rates upward. Plus, the National Multi Housing Council reports it’s not home purchases that are on the rise, but rentals.“Demand for apartment residences has substantially increased thanks to modest improvements in the job market and the continuing decline in homeownership rates," says NMHC chief economist Mark Obrinsky.
Maybe that’s why the Obama administration is rumored to be considering an “August Surprise,” a term used by business columnist Jim Pethokoukis to describe a situation in which Uncle Sam forgives underwater mortgages for millions of U.S. homeowners.
Low mortgage rates will still be with us for a while, and that’s a good thing for homebuyers looking to lock in a low interest rate, especially with the busy fall buying season imminent. If more people step up and lock in a low mortgage rate, that could be enough to provide a bounce to the housing market, and send mortgage rates climbing.