June 3, 2025 – How Long Can This Job Machine Produce?

Economic Commentary

We have been asking this question for quite a long time. Ever since the end of the pandemic, our nation’s economy has been producing millions of jobs per year. These jobs not only made up for the job losses during the pandemic but also added several million jobs in addition to those that were lost.  At the same time, for the past few years, we have heard rumblings of a coming recession.  Instead, robust job creation has kept the economy positive year after year. 

Considering that we more recently experienced a weak quarter of economic growth in the first quarter, we have good reason to come back to this overall question about the job machine at this point in time. Thus far this year, job creation has held up pretty well.  But every year we have unique challenges which could cause this equation to change. This year we are facing layoffs in the federal government sector in addition to economic uncertainty over the implementation of tariffs. Could this be a turning point?

This is why the May jobs report to be released this Friday is going to be watched even more closely than usual. If the economy continues to produce jobs at a decent clip, we have the potential to override the current economic concerns.  On the other hand, if job growth wanes, the scales could tip in the other direction. Thus, the economic analysts, including those of the Federal Reserve, will be poised to flood us with prognostications regarding the economy and interest rates starting very early Friday morning.

Weekly Interest Rate Overview

The Markets. Mortgage rates were fairly stable in the past week, despite some day-to-day volatility mainly associated with news regarding tariffs. The employment report to be released this week could contribute to additional volatility. According to the Freddie Mac weekly survey, 30-year fixed rates rose to 6.89% from 6.86% the previous week. In addition, 15-year loans increased slightly to 6.03%. A year ago, 30-year fixed rates averaged 7.03%, 0.14% higher than today. Attributed to Freddie Mac: “This week, the 30-year fixed-rate mortgage rose slightly higher,” said Sam Khater, Freddie Mac’s Chief Economist. 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

As home buyers navigate high interest rates and rising living costs, many are surprised to discover a narrow price gap between new and existing homes. In fact, during the first quarter of 2025, the median sales price of a new home was just $14,600 more than that of an existing one. According to data from the U.S. Census Bureau and the National Association of Realtors, the median price for a new single-family home sold during the first three months of 2025 was $416,900, compared to $402,300 for an existing home. This modest $14,600 gap is notably small by historical standards. For context, in the fourth quarter of 2022, the difference peaked at $64,200, with new homes commanding a larger premium. Typically, new homes sell for more than existing ones. However, during the second and third quarters of 2024, existing homes exceeded new homes in price. While that anomaly has since reverted, the continued narrow gap underscores a housing market still contending with low inventory — especially for entry-level homes.  New home prices have declined year over year for eight consecutive quarters. In Q1 2025, the median new home price dropped 2.32% compared to the same period last year. Meanwhile, prices for existing homes have risen for seven straight quarters, increasing 3.38% year over year. Source; National Association of Home Builders

Seniors now make up nearly one in three shared households, with 65+ participation tripling since 2005. Once the province of younger folk looking to handle the high cost of owning or renting, house sharing is finding increased acceptance among the older set. As of 2023, seniors accounted for three out of every 10 house-sharing households.  Between 2005 and 2023, the number of households led by adults 55-to-64 years of age almost doubled to 1 million, according to the latest Census Bureau figures. That cohort saw their share of co-housing increase from 9% to 14% during the period. But the share of house-sharers 65 and older increased 2.7 times. The oldest group now accounts for more than a million, or 15%, of all house-sharing households. That amount more than doubled their 6.8% share 20 years ago. Overall, a record 6.8 million households share their living arrangements with people who are unrelated. That number had been rising steadily since the 2008 housing crash, from 5.3 million in 2008 to 6.7 million in 2019 when the pandemic interrupted the upward trend and it all but fell apart.  “The pandemic dramatically redefined living arrangement preferences,” commented Natalia Siniavskaia, assistant vice president for housing policy research at the National Association of Home Builders (NAHB). “Reflecting the shift towards more spacious, lower-density independent living, the number and percentage of house-sharers collapsed in 2020.”   Source: Lew Sichelman For National Mortgage Professional

National Association of Home Builders (NAHB) has highlighted recent data from the American Community Survey (ACS) that shows almost half of the owner-occupied homes in the U.S. were built before 1980 and have a median age of 41 years. The aging housing stock, combined with insufficient new home inventory, indicates the remodeling market is poised for future growth. The U.S. owner-occupied housing stock has aged rapidly, particularly since the Great Recession, as ACS data analyzed by NAHB shows that around 48% of the housing stock dates back to the 1980s and earlier. The median age of owner-occupied homes climbed to 41 years in 2023, up from 31 years in 2005. “The aging housing stock continues to drive remodeling projects as homeowners are increasingly choosing to tap into their home equity and invest in improvements rather than relocate, creating long-term growth prospects for the industry,” said NAHB Remodelers Chair Nicole Goolsby Morrison, a remodeler from Raleigh, N.C. “In fact, NAHB is forecasting residential remodeling activity to post a 5% gain in 2025, and a nominal gain of 3% in 2026.”  The share of relatively newer owner-occupied homes (those built within the past 13 years) has declined greatly, from 18% in 2013 to only 12% in 2023. Meanwhile, the share of older homes that are at least 44 years old has increased significantly, rising from 39% in 2013 to 48% in 2023. Source: NAMB