After the release of national employment data last week, we began to delve a little deeper and look at employment on a local level since the labor market, much like the housing market, is very much local.    What we found was that the top-three metropolitan areas in the U.S. with the lowest unemployment rates were all in North Dakota.  Bismarck recorded an unemployment rate of 2.7% in October while the unemployment rates for both Fargo and Grand Forks stood at 3.2%.  With such healthy labor market conditions, it should come as no surprise that housing in these areas is also holding up quite well.  According to data from Housing IntelligencePro, total home closings year-to-date are up 5% from year-ago levels for all three metro areas combined.  Bismarck was by far the leading-performer with closings up over 27% in 2010 compared to the same nine months last year.  Median home prices in the third quarter are also up over 6% from the same period last year for the three combined regions.  It is further indication that the housing market does not exist in a vacuum; it requires a solid economy and especially a healthy job market.

In broader housing news, despite the Fed’s efforts to promote economic growth and keep interest rates low through their second round of quantitative easing, fixed-mortgage rates have now increased for four straight weeks to their highest levels since June.  Stabilizing debt conditions in Europe and a recent run-up in equities have displaced investors out of the treasury market which have pushed bond prices and yields higher in recent weeks.  However, shorter term yields have not experienced quite the upside move as longer term yields in the past few weeks.  Rates still remain at historically low levels and are still lower than they were this same time last year.

The Economy
Initial jobless claims fell by 17,000 in the week ended December 4th to a seasonally-adjusted 421,000.  The figures came in slightly better than most economists had expected.  Jobless claims continue to teeter up and down and have not shown any encouraging signs of falling and remaining under the 400,000 level that would be needed to chip away at the high levels of unemployment and underemployment.  Claims plunged to near the 400,000 mark two weeks ago which was an encouraging sign but jumped back last week before this week’s decline.

Housing Market
National average mortgage rates increased from the previous week to 4.61% in the latest Primary Mortgage Market Survey released weekly by Freddie Mac on December 9th.  After reaching all-time record lows just four weeks ago, mortgage rates have now increased for four consecutive weeks.  This is the highest rates have been since the last week of June.  However, mortgage rates have now averaged less than 5.0% for 31 straight weeks.

In the week ending December 3rd, the MBA’s seasonally-adjusted purchase index increased 1.79% from the previous week but was still down 12.67% compared to the same time last year.  This is the third straight week that the purchase index has increased and the highest it has been since early May.

Rising mortgage rates have stalled refinance activity in recent weeks but have helped purchase activity slightly as buyers who were on the sidelines try to capitalize on what is still a historically low interest rate environment before they rise even more.

For market-level data and analysis please visit our website at http://www.hwmarketintelligence.com.  For more detailed information on the indicators discussed in this key indicator alert, please visit the following links: