🔍 Mixed Jobs Report Sends Mixed Signals for Mortgage Rates

On Friday, June 6, 2025, the U.S. Bureau of Labor Statistics announced:

• 139,000 jobs added in May, exceeding economist expectations of around 125–130K.

• The unemployment rate held steady at 4.2%, unchanged for the third consecutive month.

• However, there were large downward revisions to March and April payrolls—95,000 fewer jobs than previously reported.

• The labor force participation rate dipped by ~0.2 points, with about 625,000 people leaving the workforce.

• Average hourly earnings rose 0.4% month-over-month (≈ 3.9% year-over-year), signaling persistent wage growth.

The bottom line: The report was mixed — solid surface job growth, but underlying weakness and labor‐force exits dilute the strength.

🏦 What It Means for Interest Rates

The Federal Reserve is paying close attention:

• While the 139k gain suggests the labor market isn’t collapsing, the revisions and soft underlying data show “cooling”.

• Wage growth above 0.4% is feeding inflation pressures, reducing the FED’s urgency to cut rates soon.

• As a result, markets have pushed back rate‑cut expectations — Citigroup now forecasts the first cut in September 2025, with only three cuts (~75 bps total) this year.

Summary: Fed likely holds steady through summer, waiting for clearer signs of labor-market weakening.

🏠 Impacts on the Housing Market

Housing remains in a bind:

• Mortgage rates are still elevated — around 7% for a 30‑year fixed — due to upward pressure on long‑term Treasury yields.

• Fannie Mae projects average mortgage rates easing only slightly, ending 2025 near 6.3%.

• Today's mortgage rates keep monthly payments high, limiting purchasing power for buyers.

• Despite a glut of homes—$700 billion in unsold inventory and ~44% of listings stuck over 60 days—home prices are still rising, up 1.4% in April.

• Fannie Mae forecasts that modest drops in rates (even if holding in mid‑6s) will lead to slightly stronger home sales, as affordability improves marginally .

• However, ongoing policy uncertainty (trade tariffs, inflation risks) will likely continue to weigh on buyer sentiment.

📉 Bottom Line & What’s Next

The May jobs report painted a mixed picture: job growth was stronger than expected, but large downward revisions and a shrinking labor force suggest some underlying weakness. Wage growth remains solid, which means inflation pressures haven’t fully cooled—and that’s keeping the Federal Reserve cautious about cutting interest rates.

For the housing market, this means mortgage rates are likely to stay elevated through the summer, continuing to challenge affordability for buyers and putting pressure on sellers. Even with rising inventory, home prices are still climbing due to limited buyer leverage.

So what should you do?

Whether you're buying, selling, or considering a refinance, having a solid strategy is more important than ever. Let’s review your options and make a plan that fits today’s market and your long-term goals.

📲 Reach out today for a free mortgage review — and let’s make a game plan that works for you.