June 10, 2025 – The Results Are In

Economic Commentary

We have another month of job results in the books.  For the month of May, the economy produced 139,000 jobs, very close to expectations. The unemployment rate remained at 4.2%. The previous two months of job gains were revised downward by 95,000, thus the numbers were weaker than they appear at face value. Finally, wage growth increased 0.4% from last month and 3.9% over the past year. Overall, this was seen as a mixed report – though the markets were anticipating a miss on the overall employment growth.

Last week we focused on the importance of this report in light of the fact that the economy continues to slow down. We had a negative growth rate in the first quarter of the year.  With analysts again predicting a recession, we have learned that it is just about impossible to have a recession if the economy is producing hundreds of thousands of jobs per month as people who are employed spend money.  Retail sales have been weak recently, which is one indication of concern in this regard.

The timing of these results is especially important as the Federal Reserve’s Open Market Committee meets next week. Most analysts are predicting that the next interest rate cut is more likely to happen in July, instead of next week’s meeting. Most speeches by Fed members have been centered around concerns regarding the effect of tariffs on inflation.  It is also interesting to note that the past two months of reports on consumer inflation (CPI) have been quite tame. The next consumer inflation report is due tomorrow. Between these two numbers, the Fed will have plenty to chew on next week.

Weekly Interest Rate Overview

The Markets. Mortgage rates eased last week in reaction to the weak private payroll report which preceded the overall employment report — though they rose on Friday after the broader report was released. According to the Freddie Mac weekly survey, 30-year fixed rates fell to 6.85% from 6.89% the previous week. In addition, 15-year loans decreased to 5.99%. A year ago, 30-year fixed rates averaged 6.99%, 0.14% higher than today. Attributed to Freddie Mac: “The average mortgage rate decreased this week, which is welcome news to potential homebuyers who also are seeing inventory improve and house price growth slow.” 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

The median age of first-time homebuyers hit 38 last year, up from 35 in 2023 and almost a decade older than in the 1980s, when the typical homebuyer was just 29, the National Association of Realtors reported late last year. Homeownership rates for Gen Z and millennials stalled in 2024, Redfin found, while older generations continued to make “fairly standard” gains despite the high costs.  The jump in the average age of first-time buyers is shocking, said Daryl Fairweather, chief economist at Redfin. “We typically think of a first-time homebuyer as somebody in their early 30s, not late 30s,” she said. One potentially less alarming explanation for the shift, she said, is that many younger buyers already purchased during the pandemic, when mortgage rates were much lower. And first-time buyers who could handle higher rates, “even if they were a bit late, would have bought in 2023,” she said. Buying a first home later in life can have long-term financial impacts, said Fairweather, noting that 38-year-old buyers will still be paying off a 30-year mortgage well into retirement. “It could mean that people are less wealthy as retirees,” she said, because home equity is a significant source of retirement savings for many households. For those who cannot purchase a home at the moment, Fairweather recommends prioritizing contributions into a tax-advantaged retirement savings account, like an IRA or 401(k). “Treat it the way you would treat your rent,” she said, ideally by making monthly payments such as 10% of your rent amount. The goal is to “create systems so that you are automatically saving the way a homeowner would.”  She also said buyers in a strong financial position shouldn’t try to time the market. “If you can afford it, there’s no reason to wait,” she said. If rates improve, it’s always possible to refinance. Based on current trends, Fairweather warned, “it’s likely going to be just as difficult to buy next year as it is this year.”  Source: CNBC

First American Data & Analytics, a division of First American Financial Corporation, released its April 2025 Home Price Index (HPI) report.  The report indicated that house prices nationally are now 57.2 percent higher compared to pre-pandemic levels (February 2020). House price growth reported in last month’s HPI for February 2024 to March 2025 was revised up by 0.2 percentage points, from +0.5 percent to +0.7 percent.  “House prices nationally reached another record high in April, but the annual growth rate has slowed to its lowest level since 2012, underscoring the ongoing rebalancing in the market,” said Mark Fleming, chief economist at First American. “Persistently high mortgage rates have tempered demand, while increased inventory has boosted supply, dragging house price appreciation down. This normalization follows the unsustainable price growth seen during the pandemic. Although affordability remains a challenge, slower price appreciation is encouraging for potential home buyers as it lets their income-growth driven house purchasing power increase. The markets with the strongest growth in the starter home price tier are predominantly located in the Northeast or Midwest,” said Fleming. “These markets include Pittsburgh, Baltimore, and St. Louis, markets that are attractive to potential first-time home buyers due to their relative affordability. However, homebuilding has also lagged in these markets, leading to high demand relative to limited supply, fueling strong house price appreciation.” Source: First American

As more Americans balance caregiving and financial pressures, a growing share of homebuyers are planning to live under one roof with extended family. A new survey by Veterans United Home Loans found that 28% of prospective buyers plan to purchase a multigenerational home—a notable rise reflecting both practical needs and shifting cultural norms. The most common reason stated?  Providing care for aging parents. Nearly one-third of respondents (29%) cited this as the top motivation. Others pointed to shared expenses (21%) or financial contributions from grandparents (27%) as key drivers. “Multigenerational homes are more than a trend: They are a meaningful solution for families looking to care for one another while making the most of their homebuying power,” said Chris Birk, VP of Mortgage Insight. According to the National Association of Realtors (NAR), 17% of recent homebuyers in 2024 purchased multigenerational homes. Among them, 36% cited cost savings as the top reason, followed by caring for aging relatives (25%) and housing adult children returning home (21%).  Generational differences shape these decisions. Gen X leads the way, with 36% saying they plan to buy a home for multigenerational living, compared to 28% of millennials. Gen X and baby boomers are more likely to have adult children living with them, while Millennials and Gen Z are more likely to live with parents.  For Gen Z, financial support is a key motivator — 44% said that’s why they expect to live with family. Younger buyers are also more likely to have family living with them part-time (29% of Gen Z and 31% of Millennials).  Source: MortgagePoint