The Mortgage Economic Review is a monthly summary of Key Economic Indicators, Data, and Events pertinent to Mortgage, Housing, and Finance Professionals.

 

AT A GLANCE – Key Economic Events and Data released during August 2025

• Interest Rates: The 10-year Treasury yield fell to 4.23% (Aug 29) from 4.37% (Jul 31).
• Housing: Existing Home Sales rose 2.0% (+0.8% YoY), New Home Sales fell 0.6% (-8.2% YoY), and Home Prices are up 2.1% – 2.6% YoY.
• Labor: The US Economy created 73,000 New Jobs during July and 14,000 in June. The Unemployment Rate rose to 4.2% in July. Wages are growing at 3.9% YoY.
• Inflation: CPI rose 0.2% in July (+2.7% YoY), and PCE rose 0.3% (+2.6% YoY).
• The Economy: US GDP grew at a 3.3% annualized rate in 2Q2025 (+ 2.1% YoY).
• Consumers: Retail Sales rose 0.5% in July (+3.9% YoY), and Consumer Confidence fell 1.3% in August (-7.8% YoY).
• Stock Markets rose in August: Dow +3.2%, S&P +2.0%, Nasdaq up 1.6%.
• Oil Prices fell to $64/Barrel (Aug 29) from $68/Barrel (Jul 31).

 

Interest Rates and Fed Watch

There was no FOMC Meeting in August. Attention was focused on the annual symposium in Jackson Hole, Wyoming, particularly on the speech by Fed Chairman Jerome Powell. In the speech, he indicated that the Fed is leaning toward another rate cut at the September 17th FOMC Meeting. He said: “Overall, while the labor market appears to be in balance, it is a curious kind of balance that results from a marked slowing in both the supply of and demand for workers…This unusual situation suggests that downside risks to employment are rising. And if those risks materialize, they can do so quickly in the form of sharply higher layoffs and rising unemployment.”

 

Fedspeak Translation: The Labor Market is slowing down and could deteriorate quickly, so we may want to lower Interest Rates before that happens.

 

The Fed is in a tough spot and worried about accelerating Inflation and Labor Market weakness. Keeping Interest Rates high will help contain Inflation but weaken the Labor Market. Lower Interest Rates will exacerbate Inflation but strengthen the Labor Market. The Fed’s Dual Mandate is to keep Inflation contained and the Labor Market healthy. It’s a tricky balancing act. At this point, Fed Watchers expect a 0.25% cut to the Fed Funds Rate in September – but that may or may not be the only rate cut we get in 2025.

• 10-Year T-Note Yield fell to 4.23% (Aug 29) from 4.37% (Jul 31).
• 30-Year T-Bond Yield rose to 4.92% (Aug 29) from 4.90% (Jul 31).
• 30-Year Mortgage fell to 6.56% (Aug 28) from 6.72% (Jul 29).
• 15-Year Mortgage fell to 5.69% (Aug 28) from 5.85% (Jul 29).

 

Housing Market Data Released during August 2025

The Housing Market continues to struggle in the second half of 2025. The good news for Home Buyers is that prices are coming down, and Inventory is increasing. All we need is lower Interest Rates to complete the trilogy, and that will set a solid foundation for a healthy Fall Sales Season. 

• Existing Home Sales (closed deals in July) rose 2.0% to an annual rate of 4,010,000 homes (3,640,000 SFR + 370,000 Condos), up 0.8% in the last 12 months. The median Single Family Home price is $428,500, up 0.3% YoY. The Median Condo price is $362,600, down 1.2% YoY. Homes were on the market for an average of 28 days. Currently, 1,550,000 homes are for sale, up 15.7% YoY.
• New Home Sales (signed contracts in July) fell 0.6% to a seasonally adjusted annual rate of 652,000 Homes, down 8.2% YoY. (683,000 New Homes were sold in 2024 and 668,000 in 2023). The median New Home price fell 0.8% to $403,800, down 5.9% YoY. (Peak $496,800 Oct 2022). The average price fell 3.6% to $487,300, down 5.0% YoY.  (Peak $568,700 Dec 2022). There are approximately 499,000 New Homes for sale, up 7.3% YoY (Low of 281,000 in Oct 2020).
• Pending Home Sales Index (signed contracts in July) fell 0.4% to 71.7 from a revised 72.0 in June, up 0.7% YoY.
• Building Permits (issued in July) fell 2.8% to a seasonally adjusted annual rate of 1,354,000 units, down 5.7% YoY. Single-Family Permits rose 0.5% to an annual pace of 870,000 homes, down 7.9% YoY.
• Housing Starts (excavation began in July) rose 5.2% to a seasonally adjusted annual rate of 1,428,000, up 12.9% YoY. Single-Family Starts rose 2.8% to 939,000 units, up 7.8% YoY.
• Housing Completions (completed in July) rose 6.0% to a seasonally adjusted annual rate of 1,415,000 units, down 13.5% YoY. Single-Family Completions rose 11.4% to an annual adjusted rate of 1,022,000 homes, down 6.1% YoY.
• S&P/Case-Shiller 20 City Home Price Index fell 0.3% in June, up 2.1% YoY.
• FHFA Home Price Index fell 0.2% in June, up 2.6% YoY.
• NAHB Index fell 3.0% to 32 in August from 33 in July and 32 in June, down 17.9% YoY.

 

Labor Market Economic Data Released during August 2025

The Labor Market is showing signs of softening, with Job Creation slowing down. Over the last 3 months, average monthly Job Creation dropped to 35,000. A few months ago, that number was almost double at 64,000. The Unemployment Rate ticked up slightly, but it’s been running in the 4.0% – 4.2% for the past year. What most Economists worry about is that once the Labor Market softens, it may also deteriorate quickly and throw the Economy into a Recession. However, the recent large revisions to the Employment Data have made it difficult to get a clear picture of what’s actually happening in the Labor Market. Is the Labor Market softening? Probably. How much? That’s the big question everyone is looking to answer.

• The Economy created 73,000 New Jobs in July and 14,000 in June.
• The Unemployment Rate rose to 4.2% during July from 4.1% in June and 4.2% in May and April.
• The Labor Force Participation Rate fell to 62.2% in July from 62.3% in June 62.2% and May.
• The Average Hourly Wage rose 0.3% in July from 0.2% during June, up 3.9% YoY.
• Job Openings fell to 7,437,000 in June from 7,712,000 in May and 7,391,000 in April. (In 2024 average Job Openings was 7,800,000).

 

Inflation Economic Data Released during August 2025

Inflation is definitely re-accelerating. Is it due to Tariffs? Maybe, but it’s too soon for the higher Tariffs to percolate through the Economy and surface in the CPI and PCE. If Tariff Inflation finally hits, it will manifest itself in the price of physical goods, not services. Currently, service inflation is driving the CPI upward. Core Goods Prices rose 0.2% in July and 1.2% YoY, while Service Prices rose 0.4% in July and 3.6% YoY. Other examples of Service Inflation include: Medical Services up 0.8% in July (4.3%YoY), Transportation Services up 0.8% (4.3% YoY), Car Insurance up 0.1% (5.3% YoY), Shelter Cost up 0.2% (3.7% YoY), Food up 0.3% (2.9% YoY), Used Cars up 0.5% (4.8% YoY). Fortunately, Energy Prices fell 1.1% in July, (-1.6% YoY), Gasoline fell 2.2%, (- 9.5% YoY).

• CPI rose 0.2%, up 2.7% YoY     |  Core CPI rose 0.3%, up 3.1% YoY
• PPI rose 0.9%, up 3.3% YoY     |  Core PPI rose 0.6%, up 2.8% YoY
• PCE rose 0.2%, up 2.6% YoY       |  Core PCE rose 0.3%, up 2.9% YoY

GDP Economic Data Released during August 2025

The 2nd estimate of 2nd quarter 2025 GDP showed the US Economy grew by a 3.3% annualized rate (+2.1% YoY). Despite all the Tariff drama, the US Economy keeps humming along. Next month, we will get the final estimate for the 2nd Quarter GDP and a good look at the first half of 2025. So far, things look very good.

 

Consumer Economic Data Released during August 2025

Consumers keep consuming. Retail Sales was up 0.5% in July (+3.9% YoY), outpacing Inflation. Naturally, Amazon Prime Days helped boost Retail Sales in July. However, Consumer Spending is shifting from discretionary items to everyday essentials. Does that shift indicate the Consumer is under pressure? Maybe, but it’s too soon to tell. Most likely, persistent Inflation is forcing Consumers

to adjust their spending priorities. The Holiday Shopping season is quickly approaching. It will be interesting to watch Consumption patterns during the next few months.

• Retail Sales rose 0.5% during July, up 3.9% in the last 12 months.
• Consumer Confidence Index fell 1.3% to 97.4 in August from a revised 98.7 in July, down 7.8% YoY.
• Personal Income rose 0.4% in July, up 5.0% YoY.
• Personal Spending rose 0.5% in July, up 4.7% YoY.
• Personal Savings Rate was unchanged at 4.4% in July from 4.4% in June, 4.5% in May, and 5.0% in April.

 

Energy, International, and Things You May Have Missed

• West Texas Intermediate Crude fell to $64/Barrel (Aug 29) from $68/Barrel (Jul 31).
• North Sea Brent Crude fell to $68/Barrel (Aug 29) from $73/Barrel (Jul 31).
• Gasoline (Wholesale Futures) fell to $2.19/Gal (Aug 29) from $2.22/Gal (Jul 31).
• Natural Gas fell to $3.00/MMBtu (Aug 29) from $3.10/MMBtu (Jul 31).
• President Trump and Putin met for 3 hours in Alaska to discuss the Ukraine War, but no ceasefire was announced after the meeting.

 

The Mortgage Economic Review is a concise summary of Key Economic Data that influences the Mortgage and Housing Markets. It’s a quick read that keeps busy Professionals updated on important Economic Information. Feel free to share this with colleagues in the Mortgage, Housing, Finance, and Banking business. To have the Mortgage Economic Review emailed to you each month, click here.

  

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Mark Paoletti, MortgageElements.com

 

This Economic Review is for informational and educational purposes only and should not be construed as investment, legal, financial, or mortgage advice. The information is gathered from sources believed to be credible and may be opinion-based and editorial in nature. Mortgage Elements Inc does not guarantee or warrant its accuracy or completeness, and there is no guarantee it is without errors. This newsletter is primarily intended for use Housing and Finance Professionals but it can be useful for anyone interested in Economics. This newsletter is not an advertisement to extend credit or solicit mortgage originations. © Copyright 2025 Mark Paoletti, Mortgage Elements Inc, All Rights Reserved.