CHM Blog

A jobs report nobody loved; a housing market that shrugged

The June jobs report landed with a thud last Thursday morning. Employers added just 57,000 nonfarm payrolls for the month, well short of the roughly 100,000 to 115,000 consensus estimate and the softest monthly print since December.

Making matters a bit worse, April and May were both revised downward, pulling the three-month moving average down to a more modest 110,000, a pace that falls short of translating into a sign of genuine labor market strength.

The one bright spot was unemployment, which ticked down to 4.2%, a tad better than the 4.3% most forecasters had penciled in. However that improvement was driven partly by a drop in labor force participation, which fell to 61.5%, the lowest level since March 2021, rather than a meaningful expansion in employment. Wage growth came in exactly as expected — up 0.3% for the month and 3.5% over the year. Not bad until you remember inflation is still running above that, which means workers are still losing ground in real terms.

Realtor.com's Jake Krimmel describes the result as a downward surprise, but one that doesn't flash any real red flags for the labor market. The sector breakdown offers some context for why. Professional and business services led the gains at 36,000, followed by social assistance at 25,000 and healthcare at 22,000 — all relatively stable, higher-wage sectors.

The bad news came from leisure and hospitality, which shed 61,000 jobs on a seasonally adjusted basis, an unusual loss for a sector that typically ramps up seasonal hiring as summer begins. Leisure and hospitality workers tend to skew younger and are disproportionately renters, which means sustained weakness there could ripple into rental markets in ways that don't show up in headline job counts.

None of this will push the Fed off its current position of fighting inflation, according to Krimmel. Fed Chairman Kevin Warsh, who called the jobs picture "steady" in an appearance just the day before the report dropped, has consistently signaled that the employment side of the Fed's dual mandate is of secondary importance right now. Inflation, still running above the Fed's 2% target for the fifth straight year, is the primary one. Following the jobs number, bond markets did pull back expectations for a near-term rate hike, with a potential September increase essentially coming off the table. But futures still point to a possible hike in October, and Warsh has been clear that he isn't offering any forward guidance on where rates are headed.

For housing, June's report amounts to a continuation of the cautious equilibrium the market has been operating in all spring. Mortgage rates held steady through the month and that stability showed up in Realtor.com's June data, Pending sales rose for a seventh consecutive month, and homes spent no more time on market than they did a year ago for the first time in 26 months. For much of 2025 and into early 2026, homes were sitting more than 11% longer than the prior year, a sign of buyer hesitation. But the gap has now fully closed.

While a 110,000 three-month average isn't the kind of labor market that drives a housing surge, it's the kind that holds things more or less in place. Krimmel frames it by saying the labor market is providing neither a tailwind nor a headwind. And with unemployment moving down rather than up, as some economists had feared heading into summer, there's at least no new alarm to be sounded against a backdrop of ongoing rate uncertainty, elevated inflation, and geopolitical volatility. At the very least, modest job growth is something.

The bigger question for housing? The leisure and hospitality weakness in June bears watching, and the downward revisions to prior months serve as a reminder that even recent strength can look different in hindsight. For buyers and sellers trying to make decisions this summer, an honest summary is that the labor market is stable enough to keep housing from deteriorating further, but not strong enough on its own to push affordability or demand meaningfully higher.

The real variable remains the Fed, and the Fed's real variable continues to be inflation.

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 are moving sideways today. The MBS market worsened by -37 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 areas that have the greatest ability to impact rates this week. 1) Geopolitical, 2) The Fed and 3) ISM

1) Geopolitical: We are not out of the woods yet, US/Iran and Israel/Lebanon are still big factors in risk, flight to quality and oil prices. Oil Prices will continue to be a big factor for rates.

2) The Fed: The Minuets from Fed Chair Warsh's first FOMC meeting as chair will be released on Wednesday.

3) ISM Services: This will hit Monday at 10 am and is the biggest economic release of the week.

Treasury Auction: We have a big week for auctions with all eyes on Thursday's 30Y bond auction.

07/07 3 year note.

07/08 10 year note.

07/09 30 year bond.

This Week's Potential Volatility: High

This morning markets are moving sideways. Volatility has started at low levels but could easily spike later 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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