Positive jobs report may mean prolonged inflation, high interest rates 

The latest jobs report may be bad news for those hoping mortgage rates will keep falling in the short term — but it should spell good news for the long-term resilience of the housing market.

In the economic jobs report released today, the U.S. added an estimated 517,000 jobs in January, much more than the estimates of around 187,000, pushing the unemployment rate to 3.4%, the lowest level in more than 50 years.

While it's obviously good news for the 517,000 people who landed jobs in January, the jump could mean the Federal Reserve has more work to do when it comes to taming inflation. Currently around 6.5%, the Federal Reserve wants to get inflation down to around 2%, which can be harder to do with such a low unemployment rate.

"Job gains are always good," said Lawrence Yun, chief economist for the National Association of Realtors, noting that it will also bode well for home sales later. "But over the short-term, mortgage rates matter more. Robust job data will raise the prospect of consumer price inflation and the need for a more aggressive monetary policy to rein in inflation. So just as mortgage rates were trending down towards 6%, there could be a temporary rise."

Perhaps in response to the hot jobs report, the daily survey of the 30-year fixed-rate mortgage jumped from 5.99% on Feb. 2 to 6.19% on Feb. 3, according to Mortgage News Daily.

But while rates are important, what matters most for buyers and sellers is the general state of the economy and the stability of their own economic situations, said Lisa Sturtevant, chief economist for Bright MLS.

"So far, the economic outlook has been relatively sanguine. Recession concerns are generally coupled with predictions of a shallow downturn without significant job losses," Sturtevant said. "Today's employment report suggests we should be prepared for a busy spring housing market as growing confidence encourages prospective buyers to get back into the market."

Despite the overall high rate of employment, the construction industry continues to have trouble filling positions. The number of open jobs increased from 331,000 to 413,000 between November and December, according to Robert Dietz, chief economist for the National Association of Homebuilders. Filling those vacancies is important in addressing the low inventory issues taking place across the U.S.

"The housing market remains underbuilt and requires additional labor, lots and lumber and building materials to add inventory," Dietz said in a Feb. 1 post. "Looking forward, attracting skilled labor will remain a key objective for construction firms in the coming years. However, while a slowing housing market will take some pressure off tight labor markets, the long-term labor challenge will persist beyond the ongoing macro slowdown."