Dive Brief:
- The jobs report released Friday — which revealed the U.S. economy added 271,000 jobs in October — has led to further claims that the Federal Reserve will likely raise short-term interest rates in December.
- U.S. unemployment fell from 5.1% in September to 5% in October. Average hourly earnings also rallied last month, surging 0.4% after seeing no change in September. Hiring was particularly strong for white collar employers.
- The rise in wages and job creation, along with the decline in the unemployment rate, has added more pressure to the Fed to raise interest rates after much anticipation. The next Fed meeting will take place Dec. 15-16.
Dive Insight:
During the Fed's October meeting, officials decided to keep interest rates unchanged, citing slowing job growth and a steady unemployment rate as reasons for caution when deciding whether to raise the rates.
This week, however, Fed Chairwoman Janet Yellen said a December rate hike was a "live possibility" if the economy continued to strengthen.
Homebuilders are keeping a close eye on interest rates, as some fear an increase would deter potential buyers from making the move from renting to owning — thus reducing the number of potential buyers for their new properties.
But officials and economists have said the slow rise in rates will not result in crippling effects for the housing market or for builders counting on a continued recovery in the residential industry.
