by Calculated Risk on 7/02/2025 08:11:00 PM

Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.

Thursday:
• At 8:30 AM ET, Employment Report for June.   The consensus is for 129,000 jobs added, and for the unemployment rate to be unchanged at 4.2%.

• Also at 8:30 AM, The initial weekly unemployment claims report will be released. The consensus is for initial claims to increase to 239 thousand from 236 thousand last week.

• Also at 8:30 AM, Trade Balance report for May from the Census Bureau. The consensus is the trade deficit to be $69.8 billion.  The U.S. trade deficit was at $61.6 billion the previous month.

• At 10:00 AM, the ISM Services Index for June.   The consensus is for a reading of 50.8, up from 49.9.

• All US markets will close early at 1:00 PM ET in observance of Independence Day

Weekly Schedule

by Calculated Risk on 7/02/2025 03:45:00 PM

On Thursday at 8:30 AM ET, the BLS will release the employment report for June. The consensus is for 129,000 jobs added, and for the unemployment rate to be unchanged at 4.2%. There were 139,000 jobs added in May, and the unemployment rate was at 4.2%.

From Goldman Sachs:

We do not place much weight on the ADP miss because of ADP’s limited correlation with BLS private payrolls over the last few years. We left our forecast for June nonfarm payroll growth unchanged at +85k ahead of tomorrow’s release. ... We expect payroll growth to slow from its 135k 3-month average because big data indicators were soft ... We forecast that the unemployment rate edged up to 4.3%—a low bar from an unrounded 4.24%—reflecting sequential increases in other measures of labor market slack.
emphasis added

From BofA:

June NFP are likely to rise by 95k. Although the initial claims increase in recent weeks can be attributed to seasonal volatility, continuing claims were also high during the survey week. We also see headwinds from weak college graduates hiring and summer job cuts for education & health workers. Additionally, leisure & hospitality job growth tends to slow in June when Memorial Day falls relatively earlier in the month in May (like this year). We expect the u-rate to rise a tenth to 4.3%.

• ADP Report: The ADP employment report showed 33,000 private sector jobs were lost in June.  This was well below consensus forecasts and suggests job gains below consensus expectations, however, in general, ADP hasn't been very useful in forecasting the BLS report.

• ISM Surveys: Note that the ISM indexes are diffusion indexes based on the number of firms hiring (not the number of hires).  The ISM® manufacturing employment index was at 45.0%, down from 46.8% the previous month.   This would suggest jobs lost in manufacturing. The ADP report indicated 15,000 manufacturing jobs added in June.

The ISM® services employment index for June will be released tomorrow.

• Unemployment Claims: The weekly claims report showed more initial unemployment claims during the reference week at 246,000 in June compared to 226,000 in May.  This suggests layoffs in June were higher than in May.

• Strikes: The CES strike report shows 5,600 employees returned from strikes during the reference period in June. This will boost the headline jobs number a little.

• Conclusion: Over the last year, employment gains averaged 144 thousand per month - and that was probably the trend prior to policy changes.  However, my guess is we will start to see the impact of policy uncertainty - a little more hiring hesitancy - and I'll take the under for June.

by Calculated Risk on 7/02/2025 12:32:00 PM

Today, in the Real Estate Newsletter: Asking Rents Mostly Unchanged Year-over-year

Brief excerpt:

Another monthly update on rents.

Tracking rents is important for understanding the dynamics of the housing market. Slower household formation and increased supply (more multi-family completions) has kept asking rents under pressure.

More recently, immigration policy has become a negative for rentals.

Apartment List: Asking Rent Growth -0.7% Year-over-year ...

The national multifamily vacancy rate currently stands at 7%, the highest reading we've recorded in our index. We're past the peak of a multifamily construction surge, but the market is still absorbing all of the new units, and vacancies are still trending up.

Realtor.com: 22nd Consecutive Month with Year-over-year Decline in Rents

In May 2025, U.S. median rent posted its 22nd consecutive year-over-year decline, dropping 1.7% for 0-2 bedroom properties across the 50 largest metropolitan areas.

This is much more in the article.

by Calculated Risk on 7/02/2025 09:44:00 AM

This graph shows heavy truck sales since 1967 using data from the BEA. The dashed line is the June 2025 seasonally adjusted annual sales rate (SAAR) of 435 thousand.

Note: "Heavy trucks - trucks more than 14,000 pounds gross vehicle weight."

Click on graph for larger image.

Heavy truck sales were at 435 thousand SAAR in June, down from 450 thousand in May, and down 1.4% from 442 thousand SAAR in June 2024.

This is the lowest sales rate since January 2022.  

Year-to-date (NSA) sales are down 6.2%.

Usually, heavy truck sales decline sharply prior to a recession and sales were a little soft recently.  

by Calculated Risk on 7/02/2025 08:52:00 AM

The BEA reported this morning that light vehicle sales were at 15.34 million in June on a seasonally adjusted annual rate basis (SAAR).

This was down 1.7% from the sales rate in May, and up 2.3% from June 2024.

Note that sales in June 2024 were depressed by a cyberattack impacting dealers’ online systems. This makes the YoY comparison look better.

Click on graph for larger image.

This graph shows light vehicle sales since 2006 from the BEA (blue) through June (red).

Vehicle sales were over 17 million SAAR in March and April as consumers rushed to "beat the tariffs".

Since then, sales have declined for two consecutive months.

The second graph shows light vehicle sales since the BEA started keeping data in 1967.

Sales in June were below the consensus forecast of 15.5 million SAAR.

by Calculated Risk on 7/02/2025 08:46:00 AM

From ADP: ADP National Employment Report: Private Sector Employment Shed 33,000 Jobs in June; Annual Pay was Up 4.4%

“Though layoffs continue to be rare, a hesitancy to hire and a reluctance to replace departing workers led to job losses last month,” said Dr. Nela Richardson, chief economist, ADP. “Still, the slowdown in hiring has yet to disrupt pay growth.”
emphasis added

This was well below the consensus forecast of 110,000 jobs added. The BLS report will be released Thursday, and the consensus is for 129,000 non-farm payroll jobs added in June.

by Calculated Risk on 7/02/2025 07:00:00 AM

From the MBA: Mortgage Applications Increase in Latest MBA Weekly Survey

Mortgage applications increased 2.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 27, 2025. Last week’s results included an adjustment for the Juneteenth holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 2.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 13 percent compared with the previous week. The Refinance Index increased 7 percent from the previous week and was 40 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 0.1 percent from one week earlier. The unadjusted Purchase Index increased 10 percent compared with the previous week and was 16 percent higher than the same week one year ago.

“Mortgage rates were lower across all loan types last week, with the 30-year fixed rate declining to its lowest level since April at 6.79 percent. This decline prompted an increase in refinance applications, driven by a 10 percent increase in conventional applications and a 22 percent increase in VA refinance applications,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “As borrowers with larger loans tend to be more sensitive to rate changes, the average loan size for a refinance application increased to $313,700 after averaging less than $300,000 for the past six weeks. Purchase activity was essentially flat over the week, as overall uncertainty continues to hold homebuyers out of the market. However, purchase activity still remains 16 percent higher than last year’s pace.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) decreased to 6.79 percent from 6.88 percent, with points decreasing to 0.62 from 0.63 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added

Click on graph for larger image.

The first graph shows the MBA mortgage purchase index.

According to the MBA, purchase activity is up 16% year-over-year unadjusted. 

Red is a four-week average (blue is weekly).  

Purchase application activity is still depressed, but above the lows of October 2023 and is 10% above the lowest levels during the housing bust.  

The second graph shows the refinance index since 1990.

The refinance index increased but remained very low.

by Calculated Risk on 7/01/2025 08:43:00 PM

Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.

Wednesday:
• At 7:00 AM ET, The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

• At 8:15 AM, The ADP Employment Report for June. This report is for private payrolls only (no government). The consensus is for 110,000 payroll jobs added in June, up from 37,000 in May.

by Calculated Risk on 7/01/2025 04:39:00 PM

From Cotality (formerly CoreLogic): US home price insights — July 2025

Spring homebuying season continues to be defined by slower price growth and tepid home buying activity.

• Year-over-year price growth dipped to 1.8% in May 2025, down from 5% price growth last May and slowest since the winter of 2012.

• Seasonal increase in home prices continues to be weak, up 0.3% compared to the month before, and less than half of 0.8% increase typically seen between April and May

• In more affordable Midwestern markets, such as Indianapolis, Kansas City, and Knoxville, as well as markets surrounding New York metro, seasonal gains in May continued to outperform pre-pandemic trends

• Illinois, up 6.4% year-over-year entered the top 5 states with the highest home price growth, following Rhode Island, New Jersey, Wyoming and Connecticut which all continue to record more than triple the national rate of price growth

• Florida, Texas, Hawaii, and Washington D.C. reported negative home price growth.
emphasis added

House prices are under pressure with more inventory and sluggish sales.

by Calculated Risk on 7/01/2025 02:46:00 PM

From the Census Bureau reported that overall construction spending decreased:

Construction spending during May 2025 was estimated at a seasonally adjusted annual rate of $2,138.2 billion, 0.3 percent below the revised April estimate of $2,145.5 billion. The May figure is 3.5 percent below the May 2024 estimate of $2,215.4 billion.
emphasis added

Private spending decreased and public spending increased slightly:

Spending on private construction was at a seasonally adjusted annual rate of $1,626.6 billion, 0.5 percent below the revised April estimate of $1,634.2 billion. ...

In May, the estimated seasonally adjusted annual rate of public construction spending was $511.6 billion, 0.1 percent above the revised April estimate of $511.3 billion.

Click on graph for larger image.

This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted.

Private residential (red) spending is 9.2% below the peak in 2022.

Private non-residential (blue) spending is 6.8% below the peak in December 2023.

Public construction spending (orange) is slightly below the peak of October 2024.

The second graph shows the year-over-year change in construction spending.

On a year-over-year basis, private residential construction spending is down 6.7%. Private non-residential spending is down 3.9% year-over-year. Public spending is up 3.3% year-over-year.

This was below consensus expectations and spending for the previous two months were revised down.