Housing Market Update | Week of May 6th

Mortgage rates dipped slightly again last week, despite some volatility in the bond market. The 10-year Treasury yield dropped to 4.1%, climbed back to 4.3% on Friday, and then dipped again to start this week. As headlines focused on tariffs, investors shifted money from stocks into bonds. A weaker-than-expected jobs report on Friday initially pointed to lower rates, but Federal Reserve Chairman Jerome Powell’s comments on economic confidence kept bonds from rallying further. This week could bring more volatility as two major inflation reports and job openings data hit the market. With the Fed keeping a close eye on employment trends, a weaker labor market could push mortgage rates lower. If Tuesday’s Job Openings and Labor Turnover Survey (JOLTS) shows a decline in job openings, we could see downward pressure on rates. Last Week's Mortgage Rate Recap Rates Dipped Slightly Despite ups and downs in the bond market, mortgage rates continued their gradual decline. Friday’s BLS jobs report showed the labor market continued to soften with the unemployment rate barely rising to 4.1%. The big question now is whether the economy can sustain current trends amid government layoffs, reduced consumer spending, and slowing residential construction. This Week's Mortgage Rate Forecast Rates Could Be Volatile This week is packed with pivotal data that could bring some volatility and give us a glimpse into potential economic trends for the months ahead. The Job Openings and Labor Turnover Survey (JOLTS) will be released tomorrow morning; as government jobs are eliminated, eyes will be fixed on the private sector to see if they can keep the employment scales balanced. It’s important to remember that government jobs were a significant contributor to job growth data in 2024. While it’s less pivotal, we also have our Consumer Price Index (CPI) and Producer Price Index (PPI) inflation reports coming on Wednesday and Thursday, respectively. The market expects to see headline and core inflation continue to drop slightly closer to the Fed’s target. Mortgage rates move every day. Make sure to stay in touch with your UMortgage Loan Originator throughout the week for periodic updates to make sure you or your clients lock in the best deal possible.

Last week was a wild one for mortgage rates. Although the Federal Reserve announced that they would not be cutting the Federal Funds rate in their May meeting, they did announce that they are tapering their balance sheet reduction. This, combined with weak labor data sprinkled at the end of the week, saw mortgage rates drop at the end of the week. Last Week's Rate Recap: Rates Dropped Slightly Last week, the Federal Reserve held its May meeting. While they decided against cutting rates, Jerome Powell, Fed Chairman, held a dovish stance on the possibility of rate cuts in the future. Last week’s labor reports also showed a softening in the jobs market which caused rates to drop quickly at the end of the week. While it’s still unlikely that we see a rate cut in the Fed’s next meeting, a weakened labor market will be the key to seeing rates drop as the year goes on. This Week's Rate Forecast: Rates Should Stay Steady After the flurry of data and insight from last week’s jobs reports and the Federal Reserve meeting, we have a quieter week ahead without much data for the market to digest. Following a steep drop to the 10-year yield at the end of the week, market analysts will have a careful approach to instill some stability throughout the week. Overall, we should expect to see some steadiness throughout the week. If you want a more comprehensive overview of the market’s reaction to the Federal Reserve meeting and labor data last week, check out a replay of today’s Special-Edition Monday Market Update. Our two hosts offered plenty of insight behind these rate movements and some tactical advice to help you use these pieces of market data to better serve our homebuyers.