CHM Blog

Strong jobs, shrinking paychecks

The economy keeps sending mixed signals, and the jobs market is no exception. Two steps forward, one question mark.

May's jobs report from the Bureau of Labor Statistics landed better than almost anyone expected. The economy added 172,000 nonfarm payrolls, blowing past forecasts that ranged from 85,000 to 110,000. Unemployment held at 4.3% for the 3rd straight month. And perhaps most quietly encouraging — those earlier strong numbers weren't a fluke. Revisions to March and April added a combined 93,000 jobs, making an already solid stretch look even better in hindsight.

Realtor.com analyst Jake Krimmel calls it what it is: a low-hire, low-fire labor market that's starting to look increasingly stable. After a rough stretch in 2025 when the data was choppy and the anxiety real, four straight months of solid payroll growth is genuinely good news. As Krimmel puts it, the labor market needs to crawl before it walks, and walk before it runs. Right now, it's walking.

But here's where the story gets complicated. The number that matters most for American households isn't the headline jobs figure — it's the race between wages and inflation. And right now, inflation is winning.

Average hourly earnings rose 3.4% year over year in May, down from 3.6% in April. With CPI expected to come in around 4.2% when the April inflation data lands next week, workers are effectively earning less in real terms than they were a year ago. Negative real wages, moving in the wrong direction. That's the quiet problem underneath the strong hiring headline.

For the housing market, this tension plays out in very specific ways. Realtor.com's data shows median listing prices have fallen for 7 straight months, with May posting the biggest year-over-year drop since 2017 — down 2.4% to $429,500. Sellers are finally reading the room. Pending listings and contract signings are both up annually. There's genuine buyer-friendly momentum building.

Still, none of that fully offsets what buyers are actually feeling. Mortgage rates remain elevated. Inflation eats into purchasing power every month. And the broader uncertainty — tariffs, AI's long shadow over employment, a Fed that may have less room to cut than hoped — keeps a lot of would-be buyers on the sidelines.

The labor market has stabilized. That's real and it matters. But stabilization alone won't unlock housing. For that, wages need to outrun inflation, not trail it — and that race, for now, isn't close.

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 under some pressure today. The MBS market worsened by -48 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) Geopolitical, 2) Inflation and 3) Central Banks.

1) Geopolitical: After a very active weekend with military action from multiple sides, a cautious cease-fire remains in place. Long bond yields will continue to react to spikes or drops in oil prices.

2) Inflation Nation: We will get both CPI and PPI this week with the most weight on Core CPI which is expected to rise by 0.3%, a reading over that would be bad for rates.

3) Central Bank: We will get key interest rate decisions from the Bank of Canada and the European Central Bank with the ECB expected to raise their rate by 25BPS.

Treasury Auction: Here is this week's auction schedule.

06-09 3 year note

06-10 10 year note

06-11 30 year BOND

This Week's Potential Volatility: High

This morning markets have started under some pressure. Volatility has started at moderate level but could spike higher on any geopolitical surprises.

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.

MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.