Mortgage rates got some room to come down Tuesday on reports that employers were less inclined to hire in June, while new readings on consumer confidence show that would-be homebuyers may be getting less fearful that tariffs will tank the economy.
Employers were looking to fill 7.437 million job openings in June, down 275,000 from May, representing 63,000 fewer openings than economists had forecast, according to the latest Job Openings and Labor Turnover Survey (JOLTS) report from the Bureau of Labor Statistics.
“The JOLTS measure of job openings has stabilized over the last six months, after falling steadily over the previous two years,” Pantheon Macroeconomics Chief U.S. Economist Samuel Tombs said in a note to clients.
2-year decline in job openings
There’s been speculation that a surge of 317,000 job postings from April to May, to 7.712 million, was evidence that employers were firing undocumented workers and hiring U.S. citizens as the Trump administration conducts immigration sweeps at job sites.
Samuel Tombs
But job openings in leisure and hospitality, which rely more on undocumented workers, fell by 264,000 in June, leaving economists at Pantheon Macroeconomics “unconvinced that businesses are turning their backs on unauthorized labor in meaningful numbers,” Tombs said.
While the Conference Board Consumer Confidence Index rose two points from June to July, to 97.2, only 30.2 percent of those surveyed said jobs are plentiful, and the share who said they’re hard to get rose to 18.9 percent, Tombs noted.
That and other indicators suggest that payrolls grew by 75,000 in July — about half of June’s 147,000 job growth.
Payroll growth cools
Declining job postings and hiring would give the Federal Reserve more leeway to cut short-term interest rates in September.
The CME FedWatch Tool, which tracks futures markets to predict the odds of future Fed moves, showed investors on Tuesday saw a 66 percent change of a Sept. 17 rate cut, up from 60 percent on July 22.
Yields on 10-year Treasury notes — a good predictor of where mortgage rates are headed next — were down nine basis points Tuesday.
Rates on 30-year fixed-rate mortgages, which hit a 2025 low of 6.48 percent on April 4, climbed into the high sixes after President Trump’s “liberation day” tariff announcement, according to rate lock data tracked by Optimal Blue.
Federal Reserve policymakers are expected to leave rates unchanged when they wrap up their latest meeting on July 30, having made clear that they’re waiting to see what impacts the Trump administration’s policies on tariffs, immigration, taxes and regulations have on the economy before lowering rates.
While the Fed has direct control over short-term interest rates, mortgage rates are determined by investor demand for mortgage-backed securities (MBS) that are the ultimate source of funding for most home loans.
As the Fed cut short-term interest rates by a full percentage point in its final three meetings of 2024, mortgage rates went up by the same amount, as incoming economic data suggested inflation was on the rise again.
In their latest forecast, economists at Fannie Mae predicted rates on 30-year fixed-rate mortgages could drop to 6.4 percent by the end of the year, and average 6 percent during the second half of 2026.
A more cautious forecast from the Mortgage Bankers Association predicts that mortgage rates will remain in the high sixes this year, falling only gradually to 6.4 percent by Q4 2026.
Consumer confidence bounces back from April low
At 97.2, The Conference Board Consumer Confidence Index has rebounded from a five-year low of 86 seen in April.
Concerns about tariffs increasing prices and having negative impacts on the economy drove April’s decline, and remain a concern to consumers.
Stephanie Guichard
“Consumers’ write-in responses showed that tariffs remained top of mind and were mostly associated with concerns that they would lead to higher prices,” The Conference Board Senior Economist Stephanie Guichard said in a statement.
The Conference Board Expectations Index, which measures consumers’ short-term outlook for income, business and labor market conditions, rose 4.5 points to 74.4. But that’s still below the threshold of 80 that typically signals a recession ahead.
Preliminary results from the University of Michigan’s Surveys of Consumers showed consumer confidence inched up in July to 61.8, the highest reading since February.
Joanne Hsu
But the University of Michigan index is “well below” its historical average, and consumers “are unlikely to regain their confidence in the economy unless they feel assured that inflation is unlikely to worsen,” survey Director Joanne Hsu said in a statement.
Average effective tariff rates on imports are currently at 18.2 percent — the highest since 1934, according to a July 28 analysis by the Budget Lab at Yale.
The Trump administration has warned dozens of countries that they’ll face higher tariffs beginning Aug. 1 if they don’t sign trade agreements, with negotiations continuing Tuesday with the European Union, China, Japan, Canada, Mexico and India.
“We continue to think that growth in consumption will slow to a crawl in the second half of this year, as tariff-related price rises gather momentum and the labor market continues to loosen,” Tombs said.
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