November’s sharp pullback in 30-year fixed mortgage rates may not last if the labor market remains strong, said Mark Palim, deputy chief economist at Fannie Mae.

Palim was speaking to the robust jobs report released on Friday, showing the U.S. added 199,000 jobs in November and that wages rose, albeit with the figures somewhat inflated by the return of striking workers from the auto industry and from Hollywood.

Homebuyers can benefit from a robust labor market and the near 80 basis point reject in mortgage rates since the end of October, Palim said. But if the “labor markets remain this strong, we believe the pace of mortgage rate declines will likely not continue in the near term or may partially reverse,” he said in a statement.

The benchmark 30-year fixed mortgage rate was edging down to 7.05% on Friday, after surging to nearly 8% in October, according to Mortgage Daily News.

Optimism around the potential for falling mortgage costs to thaw home sales helped lift shares of Toll Brothers Inc.,

and a slew of other homebuilders tracked by the SPDR S&P Homebuilders ETF, 
to record highs earlier this week, even while investors in some homebuilder bonds have been sellers in recent weeks.

Yields on 10-year
and 30-year Treasury notes
were up sharply Friday, to about 4.23% and 4.32%, respectively, but still below the highs of about 5% in October. The surge in long-term borrowing costs was stoked by tough talk by Federal Reserve officials about the need to keep rates higher for longer to bring inflation down to a 2% annual target.

Read: Solid job growth, sharp wage gains sends Treasury yields up by the most in months

U.S. stocks were up Friday afternoon, shaking off earlier weakness following the jobs report. The Dow Jones Industrial Average
was 0.2% higher, advance narrowing the gap between its last record close set two years ago, the S&P 500 index
and the Nasdaq Composite Index
also were up 0.2%, according to FactSet data.

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