In this weekly market update, Jordan Keck reviews the Federal Reserve’s decision to hold rates while leaving the door open for future cuts, highlighting a sharp one‑week decline in average mortgage rates from 6.91% to 6.40%. He explains how borrowers can protect themselves in a falling‑rate environment through lender float‑down policies, rate renegotiations, or switching lenders. Keck then examines May home‑price appreciation data from the Case‑Shiller and FHFA indices, noting modest month‑over‑month changes and a year‑over‑year slowdown. He moves on to labor‑market reports—JOLTS job openings, ADP employment, and the BLS July jobs and household surveys—emphasizing weaker job growth, a rise in unemployment to 4.3%, and the implications of these figures for the Fed’s dual mandate and potential rate cuts. Pending home‑sale activity is discussed, with a 4.8% month‑over‑month rise and improved year‑over‑year performance, signaling increased buyer confidence as rates become more affordable. Throughout, Keck urges lenders and brokers to proactively communicate with clients about rate‑lock strategies and market conditions, framing the recent data as a sign of reprieve for the housing market.
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Good morning and happy Friday. Jordan Keck here, your lender buddy, with your weekly market update. Kicking things off, the Federal Reserve did meet this week and chose not to raise the federal market rates, but are giving themselves the opening to be able to lower that in the future. And a lot of what we're talking about today is the data around that. Big drop in interest rates this week. Last week we were at 6.91% on average, this week at 6.40%, dropping a full half a percent on average interest rate in a single week. So a lot of that data is as a result of what we're going to be talking about today. But due to that, the weekly mortgage tip I want to talk about has to do with being in a dropping rate environment. Haven't been something that we have seen since probably 2020. And so one of the big questions we're starting to get now is, what happens if I've already locked in my interest rate, which most people should be locked in right at the beginning. If I lock my interest rate and rates drop a half of a percent, am I stuck, right? Do I— what can I do to get a lower interest rate? And in general, this is when you're going to be wanting to ask about your lender's float-down policy. Oftentimes, or, you know, float-down policy or rate negotiation might be another term. Where essentially if the market improves a certain amount, you may be able to take advantage of that. Now you're not always going to get the absolute best current market value at that time. There's usually some kind of a cost added on to it, but it's still significantly better than where you initially locked. So, you know, I had a client the other day who was locked in at what was the average market rate, about 6.9%, and then just today we're able to drop them down about a full half a percent. There's a little bit of a cost on it, but not nearly what it would have been if they were still in that same block. So great options out there. Oftentimes loan officers may not be the ones prompting these conversations, and you don't want to wait until the last minute for closing. So make sure you're proactive, talk with your clients, talk with your loan officers on your buyer deals, make sure they're looking at the current market and seeing if they've got a float-down policy or rate renegotiation to take advantage of those lower rates. Worst case scenario, if they're not able to take advantage of that, there's no float-down policy or rate renegotiation. As a broker, we can move clients from one lender to a different one, transfer the appraisal if it's been done, transfer all of their documents. So really, do we just got to go through underwriting again, which can be done very quickly and get them a new lock. So a few different ways to do that. And of course, the last option is if they don't lock up front, then they're going to be subject to whatever the market does. Now, it's a bit of a risk because you don't want to lock in and have rates continue to go up on you. But if a client has a little bit of tolerance for that risk, might be something to where they're just in close contact with their loan officer, keeping that rate floating as long as possible to hopefully take advantage of continuing lower rates. Next up here, we got the Case-Shiller and FHFA appreciation data for homes coming in for May, always a couple of months delayed. Case-Shiller up 0.3% for the month, and FHFA flat for the month. Remember, Case-Shiller takes into account all homes, including those paid for with cash and those above the conventional maximum finance limit. FHFA only takes into account those loans that are— only those properties that have loans under the maximum conventional limit, currently $766,000. Case-Shiller year over year showed prices up about 5.9%, which is a drop of 0.5% from the previous report of 6.4%. And then FHFA, of course, being flat month over month, now up 5.7% year over year, which is down from the 6.5% previous report that they had. In both reports, April was revised higher by 0.1%, stronger than originally reported. Next up here, getting into some of the jobs data for this week, the JOLTS job openings report for June showed job openings drop from 8.23 million to 8.18. Now, the previous report was also revised higher by about 100,000. So making the comparison here, you know, that would have actually been an increase of job openings if it wasn't for that revision. Now it's a decrease because of that. There are still a lot of remote jobs that are being double counted though. So it's difficult to try and estimate exactly how many duplicates there are, but it's pretty clear that 8 million is far above the actual number. Some estimates I've seen are as many as about 1.5 million below that current level are the actual true job openings. Reason for that being with remote jobs, you've got a lot of areas that are advertising the same job, 2, 3, 4, 5 different places or more. When this report makes it look like multiple jobs, when in reality it's just one job being advertised in multiple areas. The hiring rate within this report fell to 3.4%, which is the lowest since 2013 when you remove COVID. But still not too far off from the low of COVID of 3.1%. And the quit rate came in at 2.1%, unchanged since the last report and the lowest since 2018 outside of COVID The July ADP employment, employment report showed 122,000 jobs created, a decent amount below the 150,000 that was expected. June was also revised slightly higher, but only by about 5,000 jobs. And looking within the report, all of the hiring took place in businesses with 50 or more employees. Small businesses lost a cumulative 7,000 jobs within this report. Services added 85,000. Construction added 90— excuse me, 39,000 for construction. But information lost 18,000 and business services lost 37,000. Next up, pending home sales rose 4.8% for the month of June. Stronger than the 1% that was expected. So decent amount up here. The previous report was also revised higher, was originally showing a -2.1% and came in with revised -1.9%. So an extra 0.2% there. Year-over-year pending home sales down 2.6%. This is way better than the previous report showed us at down 6.6%. And looking at the interest rates coming in lower this month and this week, I think we're going to continue to see really strong movement with a lot of buyers getting off the fence and getting into the game as a result of better sentiment and more affordability for those homes. The NAR Chief Economist Lawrence Yun mentioned about the, the pending home sales. He said the rise of housing inventory is beginning to lead to more contract signings. Multiple offers are less intense, and buyers are in a more favorable position. And lastly here, just today, this is probably the biggest thing for rates to drop, was the BLS jobs report. And this is one that we've talked a lot about. It's been constantly negative revised because the headline numbers are so wrong. They're always overstating the jobs. Well, the headline number showed only 114,000 jobs created for July, below the estimate of 185,000. And keep in mind, they do revisions up to 2 months after the fact, so we might see this number revised even lower. In the coming month or two. In fact, no surprise, there were negative revisions to the previous 2 months of 29,000. So not only were we 71,000 below estimates for the headline, but 29,000 negative for the previous months. So we missed over 100,000 jobs based on estimates today. And that is great news for interest rates. Because one of the biggest things the Federal Reserve is looking at right now are the employment reports. And the inflation numbers. And in their meeting here, where they left the interest rates unchanged, they gave themselves the option essentially to cut rates or hold steady for their next meeting in September based on the data. So having this is a great permission slip essentially for the Fed to be able to cut rates, assuming that we see good inflation numbers as well. Within this report, the household survey, which is where the unemployment rate comes from, it showed only 67,000 job gains, again, well below the actual number that was expected. And with the labor force increasing 420,000, this meant unemployment jumped up from 4.1% to 4.3%, a really big jump month over month for unemployment. And this is the highest number since October of 2021. Again, strong signal to the Fed, who has a dual mandate of price stability, which they define as 2% annual inflation, and maximum employment. So the higher they see unemployment going, the more permission they're giving themselves to be able to cut interest rates if they see inflation is also playing ball. A lot of data this week, but definitely something that we want to be aware of moving forward with rates potentially going to be going lower. So having those conversations with your clients, getting them moving, and letting them know some good news for once, we're finally starting to see some reprieve. Have a fantastic weekend. We'll see you next time. Take care.
