Rising unemployment could impact homebuying activity

The unemployment rate inched higher in July from the previous month, and new data indicates an overwhelming majority of states experienced increases during this period.

The unemployment rate inched higher in July from the previous month, and new data indicates an overwhelming majority of states experienced increases during this period.

Jobless rates rose in 44 of the 50 states, according to a report from the Department of Labor. Although the national unemployment rate was recorded at 8.3 percent, a very different picture was painted on a local basis.

Specifically, the unemployment rate in Nevada remained the highest in the country at 12 percent, the report said. This was one of the hardest-hit states following the housing market collapse, and the area's construction industry was left in ruin, which had a damaging impact on both the real estate industry and job market.

The second-highest unemployment rate was in Rhode Island, at 10.8 percent, although this was a 1.8 percent improvement from a year earlier, the report said. Meanwhile, California remained in a close third at 10.7 percent. The most significant month-over-month unemployment increases were in Alabama and Alaska, where the rates both surged 50 basis points to 8.3 and 7.7 percent, respectively.    

In contrast, the lowest unemployment rate during the month of July was in North Dakota, at just 3 percent, which was less than half the national average.

Joblessness weighs heavily on consumer activity

A high unemployment rate could impact the financial safety and soundness Americans feel toward making major investments, such as purchasing property, for quite some time. This is unfortunate, since the current relationship between mortgage rates, home prices and median household incomes has kept affordability high for much of 2012.

However, during the week ending August 10, overall home loan volume declined 4.5 percent on a seasonally-adjusted basis, according to the Mortgage Bankers Association. This was the result of a 2 percent decrease in purchase requests, while fewer current homeowners capitalized on mortgage rates hovering near all-time lows, as refinancing activity declined 5 percent to an overall share of 81 percent, the report said.  

During this period, 30-year fixed mortgage rates with conforming loan balances of less than $417,500 remained unchanged from the previous week at 3.76 percent. Meanwhile, 30-year FRM jumbo loans dipped to just 4.03 percent, from 4.04 percent the report said.



blog comments powered by Disqus