CHM Blog

Hiring stalls

Two reports on the same labor market, two days apart, and they might as well have come from different planets.

ADP told us on Wednesday that private employers added 90,000 jobs in September. The government's count on Friday said 29,000. Realtor.com's Jake Krimmel calls it a clear miss, and the details underneath are worth a closer look.

Let’s start with the revisions. July, which had been revised up to a gain of 21,000 jobs, now shows a loss of 10,000. August was trimmed to 133,000 from 162,000. Together that takes 60,000 jobs off the prior two months and cools the rebound August seemed to promise. Economists had been looking for 84,000 new jobs, and prediction markets gave roughly even odds that September would top 100,000, so this landed far from where the crowd was looking. ADP's own breakdown showed how uneven hiring has been. Education and health services added 55,000 jobs, while financial activities lost 16,000. ADP also cautioned that its figures can differ notably from the government's count, and this month they did.

The unemployment rate rose to 4.2%, which sounds worse than it is. Krimmel points out that the unrounded rate only moved from 4.14% to 4.18%, a change of 0.04 points. Layoffs haven't picked up, and weekly jobless claims keep falling. What that adds up to is the low hire, low fire market we've had all year, and he expects it to hold into 2027. Employers aren't cutting people loose, but they also aren't adding many.

The Fed probably won't change course because of one soft report. Unemployment is still low, so there's no labor emergency to pull the committee's attention off inflation. Krimmel describes the Fed's stance as risk management, an effort to keep supply-driven inflation from getting worse in the face of geopolitical instability and higher energy prices. Markets had already been backing away from an October hike, with the odds falling from 69% on September 24 to under 30% before the report. After Friday, a hold looks even more likely, though the consensus still points to another hike before the year ends.

That matters for anyone with a mortgage in their future, because the pressure behind rates hasn't gone anywhere. The 10-year Treasury recently hit a 24-year high, and Freddie Mac's average 30-year rate has climbed from 6.66% to 7.28%. Krimmel notes that the 62 basis point jump since the start of September works out to about $19,000 less house on a budget of $2,000 a month for principal and interest.

September's housing data shows the strain. Pending sales fell 4.1% from a year ago, the biggest drop since March 2025. About 20.8% of listings had a price cut, the highest single month for reductions since October 2022. A sluggish job market on one side and tougher financing on the other leaves buyers and sellers squeezed at both ends. Krimmel's read is that the jobs picture will likely stay static this fall, so nobody should count on a particularly lively housing market either.

Realtor, TBWS

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I'm among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Neutral

Mortgage rates have started under pressure today. The MBS market worsened by -54 bps last week. This was enough to increase mortgage rates or fees. The market experienced high volatility last week.

This Week's Rate Forecast: Neutral

These are the three things that have the greatest ability to impact rates this week. 1) ISMs, 2) The Fed and 3) Treasury Auction.

1) ISMs: The most important economic release of the week is Monday's ISM Non Manufacturing (services) which accounts for about 2/3 of our entire economic engine. ISM Services PMI was reported at 54.9 versus expectations of 55.0. Bonds will focus on Prices Paid.

2) The Fed: We will get the Minutes from the last FOMC meeting on Wednesday and have a ton of Feds talking just about every day this week.

3) Treasury Auction: A large supply of longer term debt is going to hit the market this week:

10/06 3 year note

10/07 10 year note

10/08 30 year bond

This Week's Potential Volatility: High

This morning markets are seeing some pressure. Volatility has started at moderate levels but could easily become high any time this week.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

Richard Sardella has been actively managing and providing services in the mortgage industry for over 30 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

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