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On Friday, mortgage rates retreated after the Bureau of Labor Statistics reported that employers added fewer jobs in April and May than previously thought, with private company hiring being sluggish in June.
Rates, which spiked after the June 27 presidential debate, are now trending down as bond market investors anticipate a rate cut by the Fed in September.
Despite an estimated 206,000 nonfarm jobs added in June, job growth slowed to 177,000 jobs per month in Q2, with government hiring accounting for a significant portion of the increase, according to Mortgage Bankers Association Chief Economist Mike Fratantoni.
Mike Fratantoni
With revisions to jobs created in April and May showing a decrease, job growth slowed further in Q2, noted Fratantoni.
Payroll growth continues to slow
In a note to clients on Friday, Pantheon Macroeconomics Chief Economist Ian Shepherdson described the April and May payroll revisions as “massive.”
Private payrolls rose by just 54,000 in June, well below the prior six-month average, and are expected to slow further in the coming months, according to Shepherdson.
Ian Shepherdson
Forecasters at Pantheon Macroeconomics anticipate multiple rate cuts by the Fed this year, starting with a 25 basis-point cut in September.
Yields on 10-year Treasury notes fell on Friday, indicating a potential decrease in mortgage rates.
During the week ending June 8, jobless claims surged above 240,000 for the first time since August 2023. This increase in jobless claims has led to concerns about the state of the economy, with many experts predicting significant rate cuts in the near future. The real estate industry is also feeling the effects, as lower mortgage rates are being hoped for to stimulate homebuyer demand. A recent survey showed a decline in homebuyer demand for purchase mortgages, indicating a challenging market for the industry. Despite this, the number of homeowners with mortgages below 5 percent is still high, showing some stability in the housing market. Subscribe to Inman’s Mortgage Brief Newsletter for the latest updates on the mortgage and closing industry. Email Matt Carter for more information.