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Troubling Unemployment Numbers Eclipsed by a Strong Housing Market
Thursday, October 15, 2020
Although the housing market continues to show strength,
Freddie Mac economists say there are increasingly troubling signs in the larger
economy. The third quarter forecast from the company's Economic and Housing
Research Group notes an apparent stall in economic activity in early July. Even
as many businesses reopened, unemployment claims continued at elevated levels, (and
posted its largest one-week increase in three months last week). In mid-September
claims totaled about 26 million. Although
the unemployment rate declined to 7.9 percent in September, Freddie Mac says a
shift from temporary to permanent unemployment and a deterioration in labor
force participation signals an underlaying labor market weakness. But then there is the housing market. One of the main
drivers of the quick recovery from the March/April downturn is the historically
low interest rates which hit an all-time low of 2.86 percent in mid-September
(and was at 2.81 percent today.) The economists forecast they will remain flat
at around 3.0 percent until the end of 2021. Total mortgage origination volumes
increased as many homeowners took advantage of historically low mortgage rates.
The main driver was a surge in refinance originations.
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