August 4, 2026 – Employment Report and Iran in Focus

Economic Commentary

First, we thought that the employment sector was recovering from a period of lackluster gains.  Then we thought that the conflict in Iran was winding down. In July we found that both thoughts were quite premature. In early July we found out that the economy added only 57,000 jobs in June and the previous two months of gains were revised downward by 74,000 jobs, a net loss of almost 20,000 jobs for the month.  Then in mid-July, the agreement between Iran and the U.S. collapsed as the rockets began firing again and traffic was disrupted within the Strait of Hormuz.  Moving into August, the hope is that both trends are reversed again.

We begin August with the July employment report, which will be released this Friday. During the past 12 months, the economy has added an approximate average of 32,000 jobs per month. This average is significantly below the pace of previous U.S. economies which were non-recessionary.  As we have previously mentioned, the sluggish population growth is one factor contributing to these low averages, which explains why the unemployment rate is not rising.  This leads to a key question – If job gains remain subdued, will the unemployment rate start trending higher? Friday’s report might provide a clue to this puzzle.

Meanwhile, the situation in Iran has threatened to escalate even further than when it intensified during the initial conflict.  Our military bases throughout the Middle East were being hit in the middle of July.  Shipping was again disrupted and energy prices once again headed upward. This news came on the heels of the tamest inflation reports we had seen all year, which was quite ironic. Long-term wars are harbingers of inflation even when energy supplies are not disrupted because of increased government defense spending.  Again, ironically this spending can cause an increase in the rate of job creation. Regardless, it is everyone’s hope that the war does not evolve into a long-term engagement.

Weekly Interest Rate Overview

The Markets. Mortgage rates were very volatile after the Fed announced its decision to hold rates steady, despite acknowledging that inflation was elevated.  According to the Freddie Mac weekly survey, 30-year fixed rates rose to 6.66% last week from 6.58% the previous week. In addition, 15-year rates also increased to 6.04%. A year ago, 30-year fixed rates averaged 6.72%, 0.06% higher than today. Freddie Mac noted that the housing market continues to benefit from more available inventory, providing prospective homebuyers with additional options and helping support buyer activity as mortgage rates fluctuate. Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

Real Estate News

Gen Z is no longer an emerging homebuyer segment — it’s becoming a primary source of purchases. New Intercontinental Exchange (ICE) data shows the generation accounted for a record 20% of purchase rate locks in the second quarter, while Millennials and Gen Z now make up two-thirds of financed purchases. The ICE Mortgage Monitor report suggests that even with affordability remaining a challenge, younger buyers continue finding ways into homeownership through government-backed financing and increasingly creative approaches to funding down payments. At the same time, home price appreciation accelerated in June, underscoring that affordability pressures remain even as inventory continues to improve. “Gen Z’s rise to nearly 20% of rate locks is one of the clearest signs yet of a generational handoff in the homebuying market,” said Andy Walden, head of mortgage and housing market research at ICE. “Despite facing one of the tougher affordability environments in decades, younger buyers are finding ways to become homeowners.” ICE said Gen Z’s market share is likely to continue climbing because much of the generation is only beginning to enter its prime homebuying years. The oldest members of Gen Z are approaching age 29, placing more of the generation squarely within prime first-time homebuying years. ICE found the cohort now represents nearly one-third of all first-time homebuyer mortgages and 27% of FHA purchase lending, highlighting continued reliance on government-backed financing to overcome affordability constraints.  Source: National Mortgage Professional

Rising foreclosures offer an opportunity for affordability-stressed buyers to find steep discounts, especially in hot markets as housing costs strain American homeowners. That’s according to a new report from Realtor.com, which found that foreclosures are increasing from extreme pandemic lows, with the current rate bouncing back to roughly 2019 levels. While this increase reflects the difficulties many homeowners are facing in today’s economy, it remains far below the spike during the 2008 financial crisis. The rise in foreclosures is tied to increasing housing costs. Buyers who purchased their homes after 2023 are at a higher risk of foreclosure because they have built less equity and have not benefited from price appreciation.  Some may owe more than their home is worth, making it harder to sell or refinance if they run into financial trouble. “Homeowners who purchased near the peak of the market with small down payments are most exposed when prices soften, because they had very little equity buffer to begin with. If the estimated value of their home falls while their loan balance stays largely fixed, they can slip into negative equity territory quickly,” Realtor.com senior economic research analyst Hannah Jones explained in a related report.  Realtor.com notes that, after foreclosure, homes are typically auctioned. If they do not sell at auction, they become “Real Estate Owned” (REO) properties and are listed for sale by the lender.  As of April 2026, REO homes made up about 1.3% of all homes for sale, and final prices were 27.2% below estimated market value.  Source: The Mortgage Note

When you drive through neighborhoods in the U.S., you might not expect that a number of those homes are empty. In fact, according to a new study from LendingTree, 14.5 million U.S. homes — roughly 1 in 10 nationwide — are unoccupied. But, LendingTree said, that doesn’t always mean availability. It said that some empty homes are used seasonally, while others are available for rent — and fewer than 800,000 are listed for sale. LendingTree said that the differences in vacancy type help explain why housing can feel scarce even when millions of homes sit empty. LendingTree said it analyzed U.S. Census Bureau data to see where vacancy rates are highest, how they’ve changed over time, and what they may reveal about local housing markets.   Of the 14.5 million U.S. homes which are vacant, 4.7 million are used seasonally or recreationally and 2.6 million are available to rent.  The national vacancy rate fell by 0.31 percentage points, or about 302,000 homes, between 2023 and 2024. Generally, a vacancy rate between 7% and 8% is considered consistent with a balanced real estate market, providing enough available housing to accommodate buyers and renters without creating significant shortages or surpluses.  “A healthy level of vacancy is generally a good thing because it gives buyers and renters more options and helps reduce competition for available homes,” said Matt Schulz, LendingTree Chief Consumer Finance Analyst.  Source: Scotsman Guide