Home purchase applications fall, mortgage rates drop to lowest since September 2024

The average US mortgage rate for a 30-year mortgage dropped to 6.25%, the lowest it’s been since September, according to a report from the Mortgage Bankers Association (MBA) on Wednesday.

The report says that for jumbo loans, which people use to buy pricier homes, the rate hit 6.32%, a level not seen since April 2023, said the report.

Not that the housing market is exactly partying over it.

The MBA’s purchase index actually fell 6.2%, seasonally adjusted. It’s holiday season, so things tend to dip, but still, lower rates didn’t push people to buy. Meanwhile, refinancing jumped by 7.4% on an adjusted basis.

The MBA’s weekly survey pulls data from mortgage bankers, thrifts, and commercial banks, and it covers over 75% of all U.S. retail residential mortgage applications. And while rates are easing, the reality is still tough: homebuyers are still dealing with heavy affordability problems.

Hiring came from services but manufacturing dropped again

December jobs data wasn’t thrilling, either. ADP says 41,000 private-sector jobs were added last month, a weak comeback from November’s 29,000 loss, a number that was actually revised up slightly from the earlier estimate of 32,000 lost. The new jobs didn’t meet the 48,000 forecast by Dow Jones, so once again, underperformance.

Nearly all the new jobs came from services. Education and health added 39,000, leisure and hospitality brought in 24,000, and trade, transportation, and utilities chipped in 11,000. Even financial services added 6,000.

That was the good part. Then came the losses: 29,000 jobs were cut from professional and business services, while information services shed 12,000. The goods-producing sector didn’t help either, with a total loss of 3,000, mostly because manufacturing jobs dropped by 5,000.

Firms with fewer than 500 workers carried the whole month.

Large employers barely showed up, adding just 2,000 jobs. Nela Richardson, chief economist at ADP, summed it up: “Small establishments recovered from November job losses with positive end-of-year hiring, even as large employers pulled back.”

Wages stayed flat while BLS prepares delayed data

Wages aren’t taking off either. People who kept their jobs saw their pay grow 4.4% from last year, same as November. Job switchers did a little better, getting an average boost of 6.6%, which is 0.3 percentage points higher than the previous month.

This ADP report lands right before the nonfarm payrolls data from the Bureau of Labor Statistics (BLS). That’s the one Wall Street actually watches. It’s supposed to be the first on-time release in a while after delays caused by the government shutdown.

According to economists surveyed by Dow Jones, the BLS report is expected to show 73,000 new jobs added in December, up from 64,000 in November. The unemployment rate is expected to tick down to 4.5%.

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