While the headline number showed the unemployment rate actually rose for the month of May from 5.4% to 5.5%, it’s the other jobs data that will have an impact today and beyond. According to the Bureau of Labor Statistics, there were 280,000 new jobs created in May, much higher than the 225,000 Jobs data stronger than expected and wage gains at two-year highexpected. In addition, wages grew by 2.3%.

That’s still lower than the Fed’s target rate of 3.5% but is still the best showing in hourly earnings in almost two years. You read here yesterday that any job creation count near 300,000 for May would hurt mortgage bonds and Treasuries and that’s exactly what happened. The benchmark FNMA 3.5 coupon opened down -17/32.

We’re still early in the month with a batch of economic data still to be released and if we see more signs of a gradually improving economy real estate investors will see higher rates down the road. Perhaps even as early as this month. The job creation data was strong enough but the wage gains combined are convincing economists the Fed can’t wait much longer. On the equities front, the Dow fell only slightly when the numbers were released, this a sign that investors are welcoming good news on the economy and less concerned about the cost of funds.

Mortgage rates for first time home buyers as well as seasoned real estate investors have been so low for so long that sub-4.00% financing has become the norm and not an anomaly. But in reality, a one-half percent increase in rate for a first timer doesn’t really reflect an enormous change in payment. On a 30 year note and a $150,000 mortgage, the difference between 4.00% and 4.50% is $43 per month. Yes, higher rates will drain the pool of buyers somewhat but as they’ve always done those who are ready to buy will simply buy a smaller home or have a higher down payment. Housing demand should continue to be on the rise in a strengthening economy.