Mortgage jobs dip, overall hiring points to stable rates

The net positive gains to U.S. employment persisted to a surprising degree in the latest Bureau of Labor Statistics numbers, maintaining a neutral mortgage rate outlook.

Industry hiring wavered in a tepid homebuying season in which the addition of 177,000 jobs to total employment in April was better than expected given federal cuts. Consensus expectations had been that the U.S. would add 135,000 jobs, down from 228,000 last month.

"These data will be enough to keep the Federal Reserve on the sidelines for now, as they assess whether the threat to economic growth or inflation is the bigger concern," said Mike Fratantoni, chief economist at the Mortgage Bankers Association

"Mortgage rates are likely to stay within their current range," he added. (The Fed has power to move short-term rates that can influence the industry's long-term ones.)

Estimates for nonbank mortgage payrolls, which are reported with more of a lag, inched down to 264,400 from a downwardly revised 264,700 the previous month. The declines were driven largely due to a drop in lending positions and despite a small increase in mortgage broker hiring.

While the overall unemployment rate has remained unchanged at 4.2% and wage growth also remained stable at 3.8% in the latest number, there are some shifts in the data that suggest a slow creep up in economic weakness that could affect the industry's future rates and prospects.

"Federal government employment decreased by 9,000 in April and is down 26,000 so far this year," Fratatoni said in emailed commentary. "Given the plans for further reductions, it is likely that this category will also shrink in the months ahead."

Fratantoni also noted that gains were limited to a few sectors in the market: heath care, transportation and warehousing. They also could be transitory, he added.

"We expect that transportation and warehousing jobs are at risk as the tariff effects kick in," he added.

A recent survey on jobs openings and labor turnover shows "a steady weakening in demand for labor, with fewer vacancies and the lowest hiring rate in roughly a decade (outside the pandemic)," according to First American Senior Economist Sam Williamson.

Williamson also foresees the Fed waiting to act on rates.

"The Federal Reserve will likely extend its 'wait-and-see' approach to further interest rate cuts as it assesses the impact of tariffs," he said.

Job prospects in some parts of the property market outside the single-family sector show signs of improving, according to Lawrence Yun, chief economist at the National Association of Realtors.

"Overall job gains indicate increased occupancy demand for apartment and commercial buildings. Therefore, nearly 10,000 jobs were added to the real estate sector, primarily related to rental or leasing activity," he said in an emailed comment.

Also, while the Department of Government Efficiency has been cutting federal payrolls, other public sector entities have been active when it comes to hiring, adding 13,000 positions in education, the National Association of Realtors economist said.

"The economy is progressing despite all the trade and tariff disruptions," Yun concluded.