After a sustained downward trajectory, nondepository mortgage companies added 1,200 workers in April, a modest boost for lenders during prime season for the housing market.
Workers employed by nonbank mortgage bankers and brokers during the month totaled 318,800, according to the Bureau of Labor Statistics. It’s a 4% decline from 331,800 the year before and an edge up of less than 1% from a downwardly revised 317,600 workers the previous month. This marks the first month-over-month increase since August 2018.
However, the economy is leveling off and nonbank mortgage employment may not get bolstered for this home buying season.
“Mortgage rates have fallen a lot in the last few months, but today’s weaker-than-expected jobs numbers could soon push rates down even more,” Holden Lewis, home expert at NerdWallet, said in a statement. “Home sales saw an unexpected slump in the spring, and feeble job creation could carry that slump through the summer home buying season. We are still in the midst of a seller’s housing market, but data like this indicates we are moving closer to a more balanced market.”
Although nonbank mortgage employment continues to lag year-ago totals, overall employment keeps moving upward — albeit at a diminishing rate — hinting the housing finance industry could do the same in coming months.
“Economic growth is clearly slowing, as indicated by the slower pace of job growth in May, downward revisions in prior months, and a leveling out of wage growth,” Mike Fratantoni, senior vice president and chief economist at the Mortgage Bankers Association, said in a press release. “The job market remains tight, but this report, coupled with other recent data, shows a distinct cooling of the economy this spring.”
“For the housing market, this slowdown in job growth somewhat offsets the benefits of lower mortgage rates, but we still expect modest growth in home sales and purchase mortgage originations this year,” Fratantoni continued.
Additions to total U.S. jobs, which the BLS releases one month ahead of nonbank mortgage numbers, increased by 75,000 in May from April. Overall unemployment remained at 3.6% — its lowest level since 1969.
Another positive indicator for housing finance prospects is the increase in construction employment. Jobs within the construction industry rose by 4,000 in May from April, which could help address the home inventory shortage.