How much do Americans spend on their mortgage?
According to a recent article from Fox Business, the average American household spends 24% of their monthly income on mortgage payments. This number comes from a quarterly report published by Realtor.com, and shows that the percentage is actually down a little when comparing quarter-over-quarter data.
Danielle Hale, the chief economist at Realtor.com, said, “We know that families are spending more to buy a home in today’s market compared with one year ago and broader historic norms. As both home prices and mortgage rates have climbed, families have to choose between not buying, buying and downgrading their must-have list, or buying and putting more of their paycheck toward the purchase.”
The report dug into the data, and showed that most first-time homebuyers tend to have higher payments and spend more on their mortgage than average. Based on current data, first-time homebuyers with a down payment under 20% spend an average of 36.5% of their income on their mortgage payment.
Mortgage rates continue slide
The national average rate for a 30-year, fixed-rate mortgage slid for the fourth straight business day on Wednesday. The national average dipped 0.04% to 7.03%* by the end of Wednesday’s session.
Data from the Institute of Supply Management showed that the purchasing managers index was higher than expected. The initial reaction spurred the bond market higher, but it dissipated by the end of the day, and bonds drifted lower.
All eyes are on Friday’s jobs data. After Friday, attention will shift to next week’s Federal Reserve meeting.
What’s the expectation for Friday’s jobs data?
The labor market is a key factor that the Federal Reserve uses to judge the state of the economy and set interest rates. The Fed spent most of 2023 raising rates to cool off a hot jobs market that was helping to drive inflation. Jobs data has continued to show stickiness, and has yet to come down to the level that the Fed would like to see.
Friday will see a release of jobs data from May 2024, and it’s expected to show a slowing jobs market. Earlier in the week, a job vacancies report showed fewer available jobs, and the ADP employment data on Wednesday showed fewer jobs added than expected.
ADP chief economist, Nela Richardson, stated, “Job gains and pay growth are slowing as we enter the second half of the year. The labor market remains solid, but we’re monitoring notable weaknesses tied to both producers and consumers.”
What are experts predicting for Friday’s report? Economists predict an increase in nonfarm payrolls from 175,000 in April to 195,000 May, but predictions vary. The unemployment rate is expected to stay steady at 3.9% and average hourly earnings are forecasted to increase by 0.3% month-over-month.
* National average rates accurate as of 6/4/24 from MortgageNewsDaily.com and are not advertised rates from Guaranteed Rate5
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