Americans Are Stuck In Two Different Realities

I’m going to do something different today. Instead of telling you what the market is doing and hoping you figure out what it means for you personally - I want to give you two honest pictures and let you decide which one you (or your clients) are living in.

Because both are true right now. At the same time. In the same market.

The Week in Plain English

First let’s talk about the data from this week. The jobs picture has been further complicated. ADP reported that private sector employers added just 44,000 jobs in July - the weakest number since January and below every single estimate in the Bloomberg survey. The prior month was also revised down. Virtually all of the gains came from healthcare. Goods-producing industries actually lost jobs.

Wednesday’s ADP number was soft, this morning’s BLS number didn’t just confirm soft – it went negative. The U.S. economy actually shed 23,000 nonfarm payroll jobs in July, against expectations of gains between 83,000 and 95,000 depending on which survey you read. Here is the nuance worth noting. The unemployment rate actually ticked down to 4.1% from 4.2%, and average hourly earnings rose 3.2% year over year - both relatively healthy readings. The job losses were concentrated in local government education - which lost 50,000 positions - and retail trade. Healthcare added 22,000. So this is not a broad-based labor market collapse. It is a specific, concentrated softening in government and retail while services and healthcare hold.

What does this mean for rates? A negative jobs number is the single clearest argument against a September rate hike. Markets were already pricing in better than 57% odds of a hike before this morning. Expect those odds to move meaningfully lower today. Bond yields should fall on this news. Mortgage rates may follow next week.

Pending home sales fell 3.7% week over week -- the steepest single-week decline since 2022. Mortgage rates hit their highest level in a year this week, with Freddie Mac's weekly average coming in at 6.69%. Mortgage application volume declined for the week and is now running behind last year's pace.

Megan Lowe and I unpacked this all in detail on Property Pursuits Wednesday if you want a more in-depth look the economics.

Now. Two competing realities…

Picture One: This Market Is Wrong for You Right Now

If any of the following is true - this might not be your moment and that is okay to say out loud.

Your job feels uncertain. The ADP number this week told us something important: the labor market is softening. Hiring slowed for the fourth straight week heading into July. The three-month average fell to its lowest level since April. If you are in leisure and hospitality, manufacturing, trade, or transportation - those sectors lost jobs last month. If your income feels shaky, a 30-year commitment at 6.69% is not the move right now regardless of what any lender tells you.

OR your debt-to-income ratio is already stretched. Rates at 6.69% on a median-priced home mean a principal and interest payment north of $2,700 before taxes, insurance, and HOA. If that number requires two perfect incomes with no cushion - this market is asking you to take on more risk than the math supports.

OR you are planning to move within three years. The break-even on buying versus renting requires time. In a market where prices are stabilizing rather than accelerating, the equity you build in two or three years may not cover your transaction costs. Real Estate is a long game. If your timeline is short, renting is not failure. Now if you would be ok keeping the home and renting it out, that’s another story…

Last reason not to buy right now? You are emotionally buying. If the primary reason you want to buy right now is fear of missing out or fear of not keeping up appearances...your decision requires more soul searching. Mortgage rates are down more than a half point since the end of last May but we are still in a volatile environment where July inflation data drops August 12th and could push rates higher. Buying from fear in a volatile market where job stability is threatened rarely ends well.

Picture Two: This Market Is Right for You Right Now

If this sounds like you - the data is actually on your side.

Your job is stable and your income is growing. Pay for job-changers accelerated 7.0% in July. Pay for job-stayers held at 4.4%. If you are employed, earning well, and your income is not contingent on the sectors that lost jobs last month - your personal economy is strong enough to absorb the rate environment. The national labor market softening does not mean your specific industry is in trouble.

You have been pre-approved and the payment works without a miracle. Not on the edge. Not if nothing goes wrong. Actually works - where you can absorb a car repair or a medical bill without missing a mortgage payment. If that is you, the fact that pending sales fell 3.7% this week is actually good news. Less competition. More negotiating leverage. Sellers who have been sitting since the spring are getting more motivated by the week.

You are planning to stay for at least five years. The buyers who bought in 2019 at rates that felt high at the time and refinanced in 2020 and 2021 did not regret it. The buyers who buy at 6.69% today and refinance when this war ends and oil comes back down and spreads normalize will likely tell a similar story in 2028 or 2029. Five-year buyers build equity through appreciation and principal paydown regardless of rate environment.

You are a Modern Earner who has been told no. FHA home loans made up 17.3% of total applications this week. The FHA rate is sitting at 6.097% -- below 6% on some days this week. Bank statement loans, DSCR loans, asset depletion -- these products exist for the buyer whose tax return tells almost none of the story. If you have been told you do not qualify, it’s worth another conversation with a good lender.

What To Do With Both Truths

It’s time to stop making major, highly personal life decisions based on sensational headlines and factors outside of your control. I will say, the August 12th CPI report is the next data milestone. July inflation is almost certainly going to be messier than June because oil prices surged back above $90 in July. If you are a buyer waiting for rates to improve before you act - that report is going to test your patience and probably your entire strategy. If you are a buyer whose personal economy is strong enough to move now - the sellers who have been trapped since the war sucked the air out of housing are motivated.

For Buyers: The New Construction Play

Builder sentiment is at historic lows and 63% of builders nationwide are offering incentives right now. The median new home price just dropped below the median resale price for only the second or third time in decades. Builders are motivated in a way they will not be when rates come down and buyers flood back.

The move this week is to have your agent identify active builder communities in your target area and ask specifically about rate buydowns, price cuts, and closing cost credits. A builder buydown can get you to a payment that feels like a 5% rate without waiting for one.

And if you are in the Reno market - I have something very cool, almost unbelievable to put on your radar. Alpine Vista is a brand new townhome community at 550 California Ave in the 89509 zip code - one of the most desirable zip codes in Reno - built by Desert Winds Homes. 145 attainable for-sale homes. Here is what makes this genuinely exciting though…

The Nevada Housing Division just launched the Alpine Vista Advantage program for this community specifically. It includes $27,500 in down payment and closing cost assistance, a 4% builder contribution, household income can be as high as $175,200 which is 150% of AMI, no first-time homebuyer requirement…you just need Nevada residency for at least 6 months.

New construction. 89509?! Under the program cap. Down payment assistance built in.

That combination does not come around very often in this market. If this fits your profile - reach out to me directly because I am an approved lender for Nevada Housing Division programs and I want to make sure you have the right team around you before this inventory moves.

For Sellers: The Fall Relaunch Playbook

Labor Day is three weeks away. Historically fall buyer activity picks up after the school year starts - and in this market specifically, buyers who paused for summer are going to re-engage in September.

If your listing has been sitting, the strategic move right now is to pull it before it accumulates more days on market, but ONLY if you do this. You (or your agent) do the work - fresh photos after a staging refresh and repairs are addressed, price recalibration based on the last 30 days of comps, and relist the Thursday or Friday after Labor Day. You will hit a refreshed buyer pool with a clean days-on-market clock and a price that reflects today's actual market.

I’m speaking out of turn again so now is probably a good time to sign off. Cheers to the weekend.