Vital Statistics:
Stocks are flattish this morning after the jobs report. Bonds and MBS are down.
The economy added 143,000 jobs in January, which was below expectations. December and November were revised upward by 110,000. The unemployment rate fell to 4.1%, which was driven primarily by statistical adjustments. The BLS finished their annual revision of the population survey, and this year’s revisions were larger than in the past. The change caused the number of people actually employed at the end of January to be 2.2 million higher than at the end of December. I am not sure what the mechanics are here, but it will be hard to interpret this report given that there is a lot of noise in it. It looks like BLS bumped up the population numbers and the number of employed people. The number of unemployed fell slightly, which accounts for the drop in the rate.
Average hourly earnings rose 3.9% on a YOY basis, which was below expectations. Average hourly earnings rose 4.1% in December. Bonds sold off about 3 basis points on the number, probably due to the drop in the unemployment rate.
Mortgage delinquencies increased to 3.98%, a bump of 10 basis points compared to last year. “Although mortgage delinquencies rose only ten basis points in the fourth quarter of 2024 compared to one year ago, the composition of the delinquencies changed,” said Marina Walsh, CMB, MBA’s Vice President of Industry Analysis. “Conventional delinquencies remain near historical lows, but FHA and VA delinquencies are increasing at a faster pace. By the end of the fourth quarter, the spread between the FHA and conventional delinquency rates reached 841 basis points, while the VA and conventional spread was 208 basis points.”
Added Walsh, “Government loans are also rolling to later stages of delinquency. Compared to one year ago, the seriously delinquent rate rose seventy basis points for FHA loans and fifty-seven basis points for VA loans, but only two basis points for conventional loans.”
Home prices rose 3.4% YOY in December, according to CoreLogic. “Home prices have remained flat since the housing market began seeing slower activity this past summer. Bifurcation across markets has also persisted. Northeastern markets drove appreciation growth due to low inventories of homes for sale while Southern markets readjusted to higher inventories and increases in variable mortgage costs, such as taxes and insurance. Home prices are also cooling in the markets in Mountain West, which have been trying to find stability over the last year following the surge in mortgage rates and price declines from pandemic highs. Despite the difficult housing markets conditions in 2024, home prices increased about 4.5% over the course of the year, a small jump compared to the 4.1% uptick in 2023. Going forward, with inventories slowly improving and mortgage rates remaining elevated, forecasts suggest a smaller overall increase in prices in 2025.”
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