For the week of AUGUST 4, 2025

“Every exit is an entrance somewhere else.”—Tom Stoppard, English dramatist

The Pending Home Sales index of signed contracts on existing homes dipped slightly in June, but the National Association of Realtors is unconcerned, as mortgage applications have been rising, a trend that’s likely to continue.

Annual home price gains have slowed. May S&P CoreLogic Case-Shiller prices fell 0.3%, for the fourth straight month, while FHFA prices of homes financed with conventional loans slid 0.2%, but both are still higher than a year ago.

Freddie Mac’s Chef Economist offered an upbeat assessment of the housing market: “Continued economic growth, along with moderating house prices and rising inventory, bodes well for buyers and sellers alike.”

BAD JOB... The market tanked on Friday on a bad jobs report that added just 73,000 payrolls in July. Worse, prior reports were revised down by a staggering 258,000 jobs, resulting in a net loss for July of 185,000 jobs.

With those wholesale revisions, it looked like the Bureau of Labor Statistics was doing a pretty bad job of gathering data. But traders overlooked this and, distracted by tariffs, pushed on with their big sell-off.

Yet GDP showed the economy growing at 3.0% in Q2 and Consumer Confidence increased in July. Plus, consumer income and spending both rose in June, and PCE inflation has been trending lower for the past six months. 

The week ended with the Dow down 2.9%, to 43,589; the S&P 500 down 2.4%, to 6,238; and the Nasdaq down 2.2%, to 20,650.

Typically, much of the freed-up risk money came over to bonds, edging up prices, the 30-Year UMBS 5.5% ahead 0.03, to 99.13. The national average 30-year fixed mortgage rate inched down in Freddie Mac’s weekly Primary Mortgage Market Survey. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.    

DID YOU KNOW… Realtor.com reports new listings rose again last week compared to last year, as the number of active listings on the market climbed 23.7% over last year, the 90th straight week of annual inventory gains.

MORTGAGE APPLICATIONS, SERVICES, JOBLESS CLAIMS... We'll check the weekly MBA Mortgage Applications Index to see if purchase applications stay ahead of last year. Economists expect the ISM Non-Manufacturing Index to show the dominant services sector of the economy growing stronger in July. Weekly Initial Unemployment Claims are forecast to remain well below recession levels.

Forecasting Federal Reserve policy changes in coming months. Wall Street now feels the Fed will cut rates a quarter percent at each of the next three meetings. Note: In the lower chart, the 86.3% probability of change means there's only a 13.7% probability the rate will stay the same. Current rate is 4.25%-4.50%.

Probability of change from current policy:

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