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By Kristin Myers, Editor-in-Chief

What's Happening Today

Some worrying news out today about the labor market: Unemployment may be on the rise. The number of Americans filing for unemployment benefits for the first time (what's known as jobless claims) jumped by 6,000 last week to 260,000, reaching levels we haven't seen since November of last year.

Normally I wouldn't write this much about weekly moves in the jobless claims numbers, but these figures could be a signal that tomorrow's jobs report for July will show that unemployment is on the rise, which would raise the likelihood that the U.S. is headed for a recession (if we are not in one already).

Economists are forecasting that unemployment will remain unchanged at 3.6%, where it has lingered for four months. If tomorrow's report is in line with expectations, it might soothe worries about an economic downturn, because workers can use their incomes to buy things, keeping the economy humming.

The strength of the jobs market so far has reinforced the Federal Reserve's argument that the economy is actually strong enough to withstand the impact of raising interest rates as the central bank tries to fight inflation. But the higher interest rates go, the more likely the possibility of a recession.

I do have some good news for all of you interested in buying a home: The average mortgage rate for a conventional 30-year fixed-rate loan dropped—below 5%—for the first time since April, according to Freddie Mac. Currently at 4.99%, the average rate has dropped significantly from 5.30% just last week. That might not seem like much, but the difference could mean saving thousands, or even hundreds of thousands of dollars, over the life of the loan.

High mortgage rates have been squeezing homebuyers and causing home sales and prices to drop in some markets as prospective buyers back out of purchases, hoping prices will fall further. If any of you reading this are hoping for that to happen, I have some bad news for you. Despite the slowdown, housing prices are still up 18.3% from a year ago and are unlikely to crash. But falling mortgage rates, combined with some of the moderating prices we are seeing in the real estate market month-to-month, may be enough to entice some buyers back.

- Kristin

Editors' Picks

Mortgage Rates Hit 4.99%, Dropping Below 5% for First Time Since April (The Wall Street Journal)

Pros and Cons of Adjustable-Rate Mortgages (The Balance)

How To Calculate Monthly Interest (The Balance)

More Americans Are Going Hungry, and It Costs More to Feed Them (The New York Times)

Federal Poverty Level Guidelines and Chart (The Balance)

How To Qualify for a Section 8 Voucher (The Balance)

The Great Unrest: 2020 Changed Economy in Ways We Can't Understand Yet (CNBC)

Term of the Day

Fixed-Rate Mortgage

A fixed-rate mortgage is a home loan where the interest rate remains the same throughout the life of the loan. The interest is what the lender charges for lending you the money. The monthly payment also goes toward paying off the principal of the loan—that's the amount you borrowed.

The advantage of the fixed-rate mortgage is that the payment is the same each month. This predictability makes it easier to plan your budget. You don't have to worry about future higher interest payments as you might with an adjustable-rate mortgage.

Off the Charts

It pays to understand how supply and demand impact the real estate market: When there are more buyers than properties for sale, prices rise. Tip the balance the other way, and prices go down.

When every prospective buyer can buy what they need, and every seller is able to sell all they are offering—the market is said to be balanced, or in equilibrium, and prices are stable. And in 2022, supply and demand have remained far from balanced.