Unemployment 2014The country’s best year of job creation since 1999 was capped off with another strong month of hiring in December, according to a news release from Meyers Research.

The unemployment rate fell to its lowest level since May 2008. Despite the good news, the market seemed to be focused on some of the weaker points in the report, mainly weaker wage growth and a shrinking labor force, the release said. Although slower wage growth is a concern, more jobs translates to more people who will eventually establish households and buy homes. It is shaping out to be a favorable spring home-buying season to come with lower mortgage rates and a strong labor market.

Strong job growth

December turned in another strong month of job growth while hiring for the previous two months was also revised higher. The U.S. economy added 252,000 payrolls on a seasonally-adjusted basis in December. This marked the 11th consecutive month that payroll growth exceeded 200,000. The labor market remains strong, which is a positive sign for the housing market and the overall economy.

Payroll growth for November was revised higher by 32,000 jobs, which made it the strongest month of job creation since January 2012.

Construction jobs increased by 48,000 in December, showing that building activity remains elevated due to increasing affordability and strong economic growth. It is a positive sign for the industry that construction jobs moved noticeably higher in a time where building usually slows down due to seasonality.

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The unemployment rate fell in December due to strong job growth and a shrinking labor force. The unemployment rate fell to 5.6 percent in December, down from 5.8 percent in the previous month. This figure equates to 8.7 million people that are currently unemployed, 383,000 less than the previous month. This coincided with a decline in the labor force which fell by 273,000. The unemployment rate is now at its lowest level since May 2008.

The labor force participation rate fell to 62.7 percent in December from 62.9 percent in the previous month which matches a 36-year low. The underemployment rate, which includes those that are looking for work but have given up and those who are working part-time but would prefer to be working full-time, continued to decline by falling to 11.2 percent from 11.4 percent in the previous month.

The market, interest rates

Bearish sentiment in the equity markets caused bond yields to fall at the start of the year. For the week ending Jan. 8, the average rate on a 30-year fixed mortgage fell to 3.73 percent from 3.87 percent the previous week.

This is the lowest that rates have been in 19 months. Rates have averaged below 4 percent for eight straight weeks and are currently 78 basis points lower than they were this time last year. Stabilizing home prices along with low rates will help improve housing affordability. Low affordability levels hurt sales activity last year, especially as many first-time homebuyers were priced out of the market. Improving affordability should help drive demand for entry-level buyers which will have a positive effect for the overall housing market, the release said.