Weekend Talking Points - 'Reopen'

The government has reopened, but it’s unclear how much official jobs and inflation data the Fed will get before its next meeting on December 10. While the government was closed, the private data on jobs (ADP, Challenger, UMich Consumer Confidence) was Halloween scary. Are Fed members paying attention? Or will they wait for official data before cutting rates again?

The government shutdown is over. First the Senate, then the House voted in favor of the Continuing Resolution, and President Trump signed it. After the longest full government shutdown in US history, it’s about darn time. Unfortunately, we will probably NOT get October employment or CPI data from the BLS, so Fed members will be going into the December 10 meeting somewhat “blind.”

ADP’s weekly “NER Pulse” report shows job losses. This new weekly report from the giant payroll processor looks at the average of the last 4 weekly job gains/losses. While the extra info is great, it’s tricky to reconcile this with ADP’s monthly jobs report. In any case, what’s important is that the latest data (for 10/25) showed 11,250 in net weekly job losses over the previous four weeks. That implies 45,000 job losses for the month ended 10/25.

TP: When the line above is moving up, job losses are decreasing or job gains are increasing. When it’s moving down, job gains are decreasing or job losses are increasing. Probably the most important thing from this graph is that the average is around ZERO. Multiply that by 4 and you get ZERO (monthly job gains). Hardly a “solid” labor market, in my opinion.

NAR’s 2025 Profile of Buyers and Sellers was kind of depressing. I love this annual report, but it made for somber reading. For example, the first time buyer share of purchases over the last 12 months was just 21%, an all-time low for the series. Prior to 2008, the average was around 40%. [More on this later.]

Consumer sentiment crashed. In November, the University of Michigan Consumer Sentiment index dropped 6% month-over-month and 30% year-over-year to 50.3. That’s the lowest since June 2022 and the second-worst index level ever. Moreover, the sub-index of Consumer Expectations hit an all-time low of 49. Finally, 71% of respondents anticipated rising unemployment over the next year.

TP: The chart above doesn’t show the latest data point (50.3). The index will no doubt improve now that the government has reopened, but it’s amazing how low it has gone.

NAR’s 2025 “Profile of Buyers & Sellers”

I look forward to this annual report because it shows us the who, what, when, why and how people move homes. It’s a giant report, with tons of useful information, but I wanted to highlight 10 stats that I found particularly interesting:

1. First-time buyers’ share of home purchases dropped to 21%, the lowest share since the NAR started collecting data in 1981. This figure was 24% the previous year. Prior to the Great Recession (2007–2009), the historical norm was 40%.
2. The median age of first-time buyers was 40 (up from 38 last year)! The median age of repeat buyers was 62 (up from 61).
3. 26% of home buyers paid cash (no mortgage) for their home, an all-time high level.
4. Among home buyers, 61% were married couples, 21% were single women and 9% were single men.
5. 76% of home buyers did not have a child under 18 in their home, the highest share recorded.
6. 84% of home buyers were White/Caucasian (they make up roughly 60% of the US population).
7. 91% of home sellers used a real estate agent. Only 5% were FSBO (For Sale by Owner), an all-time low.
8. The share of buyers who own more than one home was 18%. (If there are fewer first-time buyers, this statistic rises in percentage terms.)
9. The typical home purchased was 1,900 square feet with 3 bedrooms and 2 bathrooms
10. Buyers expect to live in their homes for a median of 15 years, with 28% saying that they were never moving.

Fewer people are getting married, fewer people are having kids, and those that have kids are having them later. The rising cost of home ownership both contributes to that and drives shifts in buyer demographics. It’s not that young people don’t want to buy their first home; they just can’t afford it in many cases. But older folks with tons of home equity and large-scale property investors with access to capital can. That’s what you’re seeing playing out in the statistics above.

So far, so depressing. But there’s a silver lining to all this. When affordability improves (through some combination of lower mortgage rates, lower home prices, higher wages, and tax breaks/grants) first-time buyers will rush into the market and overall transaction volumes will increase. That will bring many of these statistics back to “normal.”

Bond and Mortgage Market

With no government data to digest, the bond markets were relatively quiet last week. That said, the “NER Pulse” release from ADP, together with the very weak University of Michigan Consumer Sentiment survey, did help move 10-yr US treasury yields back below 4.10%. Average 30-mortgage rates were basically flat week-over-week at 6.24%.

Note: After the rate cut on Oct 29, the Fed Funds Rate policy range is now 3.75–4.00%. The probabilities below come from the CME Group website and are implied from the Fed Funds Rate futures market.

• December 10 FOMC Meeting: 48% probability that rates will be 25 bps below current (was 91% three weeks ago). In other words, the market is now 50/50 on whether the Fed will cut rates at their December meeting.
• January 28 FOMC Meeting: 50% probability that rates will be 25 bps below current (was 57% last week). That implies a 25 bps rate cut at one, but not both, of the December and January meetings. 21% probability that rates will be 50 bps below current, which implies a rate cut at both the December and January meetings.

They Said It

“As a result of decreased housing affordability and limited housing inventory, potential first-time buyers retreated further from the housing market. Homeowners continued to watch their housing equity grow. The housing market remains divided between an all-time high of all-cash home buyers and an all-time low of first-time buyers.” — NAR’s 2025 “Profiles of Buyers and Sellers Report”