Mortgage jobs post first two-month decline since 2019

Jobs at non-depositories active in housing finance in March declined for two months in a row for the first time since 2019, according to Bureau of Labor Statistics estimates.

The number of people on nonbank mortgage-banker and broker payrolls fell to 422,100, compared to 426,200 the previous month and 428,000 in January.

Those numbers confirm several anecdotal reports of layoffs in the industry due to the biggest upward move in rates since 2009. But strength in the financial industry and overall employment could provide a safety net to unemployed workers in housing finance willing to change jobs.

“While employment in mortgage lending may be declining due to the sharp drop in refinance volume, overall employment in the financial sector is growing,” said Michael Fratantoni, chief economist at the Mortgage Bankers Association, in a press statement.

However, he cautioned that the current rate of employment in broader financial services and the overall U.S. job market could eventually falter.

“Job growth has averaged 523,000 over the past three months, which is much faster than can be sustained over time,” Fratantoni said, noting that U.S. employment is now within striking range of where it was prior to the pandemic.

Broader U.S. employment numbers, which the BLS reports with less of a lag than mortgage-job estimates, were up by 428,000 in the past month. So even with reports of industry layoffs becoming increasingly frequent, the U.S. unemployment rate in April remained stable at 3.6%.

One of the strongest job markets in 50 years and persistently high household-formation rates, which have been outpacing the supply of homes, could help limit the degree to which lending subsides in response to the loss of rate incentives to either refinance or buy a property.

“Although mortgage rates have risen sharply, and home prices have continued to rise at a rapid pace, we expect that many potential homebuyers will continue to be in the market given their strong financial position,” Fratantoni said.

However, the strength the broader job market showed Friday suggests monetary policymakers are unlikely to back away from their plans to put upward pressure on rates in order to quell inflation.

“Overall, we believe this report will not alter the Federal Reserve’s plan to continue to raise the policy rate multiple times over the coming month,” said Doug Duncan, chief economist at government-sponsored housing agency Fannie Mae, in a press release.

Some of the job numbers reported Friday suggest the supply of homebuilding labor available to address demand has improved a little, but economists warned that it’s still relatively weak. Jobs in residential construction were up 3,500 in April, but average hourly-earnings growth fell.

“Construction employers face stiff competition for labor from other industries willing to pay more,” said Odeta Kushi, deputy chief economist at First American, in a press statement. The average hourly growth-rate dropped to 5.3% in April from 6.1% the previous month, she noted.