U.S economy in dire straits? Housing market roiled as mortgage demand drops and hiring slows

Economic Times

30-04-2025

US housing market faces headwinds as mortgage applications decline amid economic uncertainty and a weakening labor market. Despite relatively flat mortgage rates, consumer confidence is dampened, leading to subdued home purchase activity. Refinancing also slows, with borrowers awaiting more significant rate drops, while concerns rise over slower wage growth and its impact on hiring decisions.
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US Housing Market Struggles Amid Economic Uncertainty
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Refinancing Activity Slows Down
Weakening Job Growth Raises Concerns
Slower Wage Growth
Economists React to the Slowdown
FAQs
The American housing market is suffering from economic uncertainty , with mortgage applications still falling against increasing fears about the country's financial well-being, as per a report.Mortgage applications to buy homes declined last week by 4%, reported CNBC. While mortgage rates have remained relatively flat, the current economic situation, combined with indications of a weakening labor market, seems to be dampening consumer confidence, as per the report.The Mortgage Bankers Association 's most recent data found that the volume was just 3% higher than the same week one year ago, even though interest rates last year were considerably higher, reported CNBC.Vice president and deputy chief economist at the MBA, Joel Kan explained that, 'Mortgage application activity, particularly for home purchases, continues to be subdued by broader economic uncertainty and signs of labor market weakness , dropping to the slowest pace since February,' quoted CNBC.Kan also mentioned that 'With slowly-increasing housing inventory in many markets and first-time homebuyers still in the mix, FHA purchase applications fared better with only a slight decline,' as quoted in the report.According to CNBC, applications to refinance a home loan fell 4% for the week and increased 42% more than the same week one year ago.The economist pointed out that the, 'Refinance activity dipped again, as mortgage rates remained close to 7%, and borrowers hold out for a bigger decline in rates. Given the pullback in refinancing, the average loan size for refinances declined to just under $290,000, the lowest level in three months,' as quoted in the report.As per ADP estimate, which serves as an indication of Friday's nonfarm payrolls data from the Bureau of Labor Statistics, the private sector payrolls increased by only 62,000 in April, the smallest rise since July 2024, as per CNBC. This is because of the increased uncertainty of US president Donald Trump's tariffs and the impact they would have on hiring plans and broader economic conditions, according to the report.Wage gains have also slowed down, as it increased just 4.5% from a year ago for those staying in their jobs, down 0.1 percentage point from March, reported CNBC. While, those switching jobs saw a rise of 6.9%, up 0.2 percentage point in the previous month, as per the report.ADP's chief economist, Nela Richardson said, 'Unease is the word of the day. Employers are trying to reconcile policy and consumer uncertainty with a run of mostly positive economic data,' adding that, 'It can be difficult to make hiring decisions in such an environment,' quoted CNBC.Economic uncertainty and concerns about the labor market have led many potential buyers to not apply for mortgages, as per CNBC.Private sector payrolls grew by just 62,000 jobs in April, the smallest rise since July 2024, as per ADP estimate.