What the big beat on jobs means for mortgage rates

HousingWire

On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about the jobs report and what it means for mortgage rates.   Related to this episode:   The truth about the jobs data in 2026  https://www.housingwire.com/articles/labor-market-rebounds-2026/   The Top 5:   The truth about the jobs data in 2026  https://www.housingwire.com/articles/labor-market-rebounds-2026/  NALHFA: HUD cuts would worsen housing affordability challenges  https://www.housingwire.com/articles/nalhfa-hud-cuts-housing-affordability-challenges/  RealTrends Verified 2026 shows higher sales volume for teams, agents in 2025  https://www.housingwire.com/articles/realtrends-verified-2026-rankings/  FHA Commissioner Frank Cassidy steps down  https://www.housingwire.com/articles/cassidy-resigns-fha-commissioner/  Secondary mortgage market waits for data, creates workarounds amid shift to alternative credit scores  https://www.housingwire.com/articles/rmbs-credit-score-data/   The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper look behind the scenes of the top mortgage and real estate.

Transcript

00:10Welcome, everyone. My guest today is lead analyst Logan Motoshami to talk about the

00:15jobs report. And boy, is this a big one. First, the top five trending articles on

00:20housingwire.com and his article on this subject is leading the truth about the

00:25jobs data in 2026, followed by HUD cuts could worsen affordability challenges. Then we have

00:31our real trends verified rankings for 2026. This is an incredible list that breaks out sides of

00:36volume for agents and teams across the country. Next, we have FHA Commissioner Frank Cassidy steps

00:42down and secondary mortgage market waits for data and creates workarounds amid shift to alternative

00:48credit scores. Lots of good stuff. Okay, Logan, welcome back to the podcast.

00:53You know, I, there are a few days where it's really fun for the nerdy side of me to go

00:59over

00:59data with other people. But today is like one of the one of the one of the best days. What

01:04I'm going

01:04to do here is almost like a very non nerdy dissertation on what's happening with the labor

01:09market so people could understand because, you know, when you and I did that podcast last year

01:15about going into 2026, and there's some, you know, we could have a better data in 2026. A lot of

01:21that

01:22principle is based on the first year of every trade war that I've dealt with. Now that's two now.

01:28Things are just very hectic. So let's remember what happened last year. We had rates too elevated

01:35for housing construction to grow. We had the trade war, which was Godzilla tariffs, which is 100 times

01:41bigger than what, what was happening in 2018, 19. Then we had a government shutdown. We're firing federal

01:50workers. There was a lot of chaos. And hiring was slowing down to the point to where only two sectors

01:57of the economy were really growing. All that is legit. The labor market was softer. But typically,

02:02the second year isn't as bad if those are still the variables, right? It's something else that has to

02:08happen to break the consumption mode of the US. And in consumption, GDP per domestic

02:15consumers was always good on the GDP side. So because you're working from the lowest bar,

02:19like the low base effect, you could have potentials for growth. And of course, I did not agree with the

02:24Federal Reserve's breakevens. Breakevens, they thought zero to 33,000 jobs being created is perfectly fine for

02:32this. I know we're going to have, we have more people out there. So when we talk about breakevens,

02:38my number was 78,000, never changed it, never agreed with the Federal Reserve on it.

02:42Since what time frame?

02:44Since 2025, adjusting to what the labor force market was happening out there. So in that context,

02:50we have upside to that. Now, if I take the jobs data for 12 months, we're averaging 42,000 jobs

02:59per month.

02:59But okay, slope of the curve, the slope of the curve was very low in terms of the jobs were

03:05even

03:05negative. And now it's just trying to get back to normal. If I take the last six months, that number

03:11is now 96,000. If you get jobs above 78,000, then the unemployment rate can go lower. And it's

03:20gone a

03:20little bit lower from the peak of last year. So this looks normal to me in the context of what

03:27happened

03:27last year, to what is happening this year. It's not like a reacceleration of some, you know,

03:35something out of the norm. But the labor market was never breaking. And when you're working from

03:42the lowest levels ever of job creation, you have upside. So I just want to put context into that,

03:48that, you know, the whole labor over inflation, the only reason rates got even got down to near

03:536% is because the bond market still thought the labor market was breaking. Getting to 5.75% or

04:016%

04:02needs neutral policy at 3% and things to go right, right on the labor side. Without that,

04:10where we are with rates looks perfectly normal, with now spreads almost back to normal.

04:16So if you run into people, and this is for loan officers and real estate agents,

04:21because I get this question all the time. I talk to people and they say they're never going

04:25to buy a house until rates get to 3% or 4%. And then you tell them that you're never

04:29going to buy a

04:30house. You are going to the grave with the house you're living in, because you need an abnormal

04:39situation to get zero interest rate policy again. And this is why I keep my 5.75%. And again,

04:45some of you guys, bless your hearts. I love the fact that you guys share like Instagram people to me.

04:50And is this guy true? The men you are quoting look like they're jobless and haven't been on a date

04:56in 20 years. If you are listening to men who don't look like they have a job or either not

05:02been on a

05:03date in 20 years, these are not economists. They're not data analysts. They're just doing

05:07poor attention people on the internet. They're not the people you should listen to. So with all that said,

05:12the jobs data looks normal, right to me. If I believe that the second year, and this is why we

05:19talk about a lot, the second year after the first crazy year of trade wars, things start to improve.

05:25And the 10-year yield got up to like 454 off of there. We have already priced in one rate

05:31hike,

05:32right? The bond yields are heading higher because now they're taking away all the rate cuts and pricing

05:38and hiking. This looks normal to me. And then on top of all that, the conflict is still going on.

05:44So as crazy as this sounds, with all the variables in place, the Fed is not talking about doing an

05:52aggressive rate hike cycle. But the market is pricing and all the rate cuts out and one rate hike

05:58in to here. And then we take it going out in the future.

06:02I think, you know, between the inflation things we've talked about, between the jobs coming in

06:07this way, I mean, great for the economy that it's growing or doing okay, not great for mortgage rates,

06:13not great for getting mortgage rates down to 6%.

06:15We're still below where we were last year.

06:19I know, but it's not 6%.

06:21Yeah, but I mean, but that's the thing is that nobody listening to this conversation is entitled to

06:27a mortgage rate at 6% where Fed policy is. This is why I keep on talking about how what

06:34it takes to

06:34just to even get down there. Because I know a lot of people are saying, oh, we're on a verge

06:38of a

06:38collapse. And if the government can't handle all these interests, there's all these crazy theories

06:43that rates have to go down. No, they don't. The neutral policy makes it very difficult to get rates

06:50below 5.7. So if the labor market improved, right, last year was labor overinflation. This year,

06:55we talked about that. That's not happening. This is kind of the range we're getting here. Now,

07:01unfortunately, the conflict has made things a little bit more complicated than it should have

07:07been. Because now we are taxing people with higher gas prices. The question is, does this slow down the

07:15consumption to a degree? Because now we had all these tax cuts that came in and they kind of washed

07:20each other out. But with where oil prices are right now and where wage growth is, it's, you know,

07:29wages are negative, right, adjusting to inflation. But for the bulk of the time over the last 12 or 14

07:36months, they were still positive because the growth rate of inflation falls. So it gets a little bit

07:40more complicated. But none of you have to worry because you have the chart daddy here 24-7,

07:46doesn't do anything else, follows all the economic data because the chart daddy is an economic person

07:51first, housing second. And we'll try to explain this. But I am still, I still have upside to my jobs

07:59on a 12-month basis because we're only averaging 42,000. On the sixth month, we're doing a little

08:04bit better than what I was looking for. And it looks kind of right. Now we have to just like

08:10wash that all

08:11out and just say, we're kind of back to normal. That's kind of what the article is about. And we'll

08:16take it from here and going out, which makes it very, very popcorn, wash the Fed. What's their, what are

08:23they going to do now with all this new information this year?

08:27Yeah, no, it is very interesting. And when's our next Fed meeting?

08:32In a few weeks.

08:34Yeah.

08:34Oh, that's going to be crazy. It'll be Warsh's first.

08:38Warsh's first. And he's going to change the Fed. You already could see what the White House is doing.

08:43Trump came out and said, economic growth is not inflationary. Kevin Hassett, the economic council

08:50leader, he was like, we need rate cuts. You know, we could do still rate cuts. So what Trump and

08:56the

08:56White House economic team is that they don't want rates to go higher, A, because the Trinity thing that

09:01we've talked about, you know, when people see higher mortgage rates, they don't feel really good. When

09:04people say lower mortgage rates, they buy homes, move, have sex, have kids, do all these things,

09:09you know. So they're trying to make this push now. Now, Kevin is going to be in the Federal Reserve

09:14right now. So it just makes it more interesting going out. Now, Beth Hammock, who is the most hawkish

09:21person on the Fed, she kind of said something kind of balanced today. She's like, you know, we don't

09:26have to raise rates. You know, we could leave rates where they are. No rate cut talks. We're

09:32taking the easing bias away from the conversation. But if things get worse, then we're going to have

09:38to raise rates. So I think for war, she just has to make it seem that for any kind of

09:44victory is not

09:45for rates to be to have a rate height cycle. Right. Because you don't just raise rates once you have

09:51to do it a few times. We have a bunch of people already talking about you need to raise rates,

09:58you know, four times, four quarter point rate hikes. Joseph LaVornia, who used to work for

10:04President Trump in the Treasury, who now works for a Wall Street firm, is saying the Fed has to hike

10:09one basis point. You know, you have other Wall Street firms today saying we have to take away all

10:14their emergency cuts. You call those emergency cuts out the door. So now it's going to be an interesting

10:20tug of war. And we just have to track the data day by day, everything retail sales, industrial

10:25production, you know, and all the things that go into the economics is that's how the Fed has to play

10:31it now, because the conflict is still here. And energy prices did not come down. This can give you a

10:39very, very good backdrop going into 2027, if you get the conflict down and energy and oil diesel prices

10:45down. But this should not be shocking about the Labor Day, but just always think of it as

10:51we had the crazy 2025. And we just now took some of that weakness off. Job growth isn't like

10:58spectacular or boomy. It's just getting back to something where I deem to be normal with population

11:04growth. So let's say the conflict ends definitively. It's very difficult to know exactly what that looks

11:11like, but in the way that like lots of things are flowing, oil prices come down. What does that do?

11:17What does that do now in this other environment? Where do rates go?

11:22So you're never going to get rates back to pre-conflict with inflation here and the jobs

11:28data like this. It is not going to happen. Okay. When we wrote that article about the conflict in Iran

11:34ending, you know, we assume that the labor market is stabilizing and getting better from last year.

11:40So we have targets, right? So 10-year yield, 4.46, 4.48. Then if you get a little bit

11:47more

11:47softness in the data or energy prices and diesel prices start to fall, 4.35. And then the best you

11:55can do is probably 4.24 at this point because you've lost that sub. And that was the surprising

12:02thing for me this year is how the 10-year yield went lower below 4% where the data wasn't

12:09really

12:10kind of warranting that, but it went there. And now the conflict has just made everything more

12:16complicated because at one point the Federal Reserve goes, well, we don't raise rates into a

12:20supply shock or a tariff shock because that is not good for the economy. Or do we raise rates for

12:26an

12:26energy shock on a conflict that could end? So it's a lot of back and forth, but just kind of

12:31realize

12:32that that 6% rate, you need energy prices to fall. You need diesel prices to fall. You need this

12:41whole

12:41inflationary burst that we've seen to retreat backwards, right? Because you don't have the labor

12:48data anymore. And the labor data was never breaking. It was just getting soft. So kind of look at it

12:53in

12:53that light and we'll take it one day at a time, one report at a time. This is what we

12:57do.

12:59But it shouldn't have shocked people as much as some people were shocked today.

13:04No, I think it's great that you laid it all out. And we've been talking about it for a couple

13:08of

13:08days too. Obviously you've been talking about it for years, but very specifically this jobs report.

13:14So love that. People need to know this information, especially if it's like, let's get ready for rates

13:19to be where they are or a little bit higher maybe. You know, the first question is, I got is,

13:26can rates go back above 7%? Again, getting above 7% with where the spreads are is a little

13:32bit more

13:32difficult now. So today's pricing, I think was 6.66%. That's with all the inflation data, war,

13:39conflict, jobs, anybody ever six with you. Why? Because of spreads. So much of the elevated rates

13:45in 2023, four and five worse spreads, that spread story. So we have to adjust to that reality and

13:52the spreads aren't getting like worse like they did in 2023 or that because the Fed has not talked

13:58about a rate height cycle. If they talked about a rate height cycle into market drama, yeah, you can

14:04get spreads a little bit of kick, but this is kind of where we're still slightly above normal. So the

14:09spreads kind of work itself out. So its job is to condense volatility, which, you know, I mean,

14:16there's a lot of, just to give you an interesting viewpoint, a lot of people, not a lot of people,

14:21but a few people said, well, the jobs data is getting better because, well, the immigration

14:27enforcement is not as bad anymore. And because after the shooting in Minneapolis and ice and everything,

14:34they're not kicking people out as much as they used to. And the labor force grew for that. I cannot

14:39prove that theory. It was just an interesting concept, but to me, it just looks, it looks normal

14:43to me. If you have a higher break, even than the federal reserve in mind that the federal reserve

14:47wrote their paper on April 2nd, 2026 outlining that you could possibly have negative job growth

14:53or zero job growth. And it'd be perfectly normal. So a lot to take in. I totally get it guys.

14:58This is

14:59why you need the chart daddy 24 seven to go over everything because it's crazy out there. And, uh,

15:05I already see the, Oh my God, rates are going to go straight back to 8%. If that's going to,

15:10you know, and those takes are just as wrong as we're on a verge of a recession and, and, you

15:15know,

15:16AI is taking all the jobs. How's that AI taking all the jobs looking now? You know, it is not

15:23good.

15:24Cause that's number one question I get, you know, uh, at events. Hey, but AI is going to take all

15:29the

15:29jobs. Nobody's going to be employed. I'm more worried about not having enough workers because the

15:34silent generations dying off the baby boomers are retiring. Gen X is mostly employed. So are

15:40the millennials. Gen Z is coming up. No country has a Dory and gray labor market, right? So it's

15:46really hard for technology to have this mass 20 to 20, by the way, the AI people are just part

15:52of my

15:52language. A bunch of jackasses. Hey, listen, our stuff is worth so much. We're going to create 25%

15:58unemployment rates and we're going to jack up your electricity by using data centers. It's what it is

16:03so stupid that you wonder why nobody likes you. And data centers are getting pulled everywhere

16:08because, because Paul, people go, you're screw you. You get, you know, $2 billion in stock values,

16:15but Oh my God, now you're going to create unemployment and everything. So to any tech person listening to

16:21or any AI, shut the bleep up about 25% unemployment rates. My God. And your data centers, you're absolutely

16:28going to get blown out of the water. And you have Republicans fighting back on data centers. Now,

16:33along with Democrats, you have Bernie Sanders asking about a 50% stake in all AI companies.

16:39Learn how to stop talking that way. Now their marketing is crazy. It's like,

16:44let's go on and talk about how this is apocalyptic. We're, we're afraid it's going to end the world,

16:49but even if it doesn't do that, it's going to take all your jobs. We have no plan.

16:52And why aren't you guys excited about it? It's like, we knew it all. We knew it all the way

17:00back

17:00in the eighties, man. Okay. So one of the things that we're going to look at this weekend, of course,

17:04is that mortgage spreads data. So you cover that in the tracker every weekend, because that's going

17:10to be even more, you know, it's, it's been key for the last two years. It'll be interesting to see

17:15what happens. Do not worry about the spreads re-accelerating. Okay. Okay. I know a lot of people are

17:19saying a lot of people think that the spreads are, you need the fed to give you an aggressive

17:24rate hike pushing higher because so much is already priced in, and the spreads aren't back

17:29to normal. They're close. They were very, very close early in the year to get back to normal,

17:33but the spreads are doing what they, what they do. People have to learn that mortgage rates around

17:376% up and down is, it's pretty normal, right? The whole, the range this year was 5.75 to

17:436.75%.

17:44And that's without the, that's your range. That's your forecast. That was the forecast range. And

17:50it is literally stayed in that range with higher inflation, then the conflict and the jobs data.

17:56So I, I'm putting all those things into the equation. And even today pricing that I saw was

18:03like 6.66. So a lot has, a lot's happened. And this is where we're at because fed policy

18:09is not basically saying we're going on a rate hike cycle, but like Beth Hammock talks about

18:14and other fed governors, if things don't get better, guys, we're going there, right? So the

18:19bond market is actually doing, it's done a much better job this year than it's done previously.

18:25Previous years, every kind of recession fear, the 10 year yield will just keep on going lower and

18:29people will be talking about it, but they're not biting as much. And that's just more disciplined

18:33trading out there. Logan, thank you for keeping us up to date on everything we need to know in this

18:38very fast changing environment. I so appreciate you. You guys are listening, go to housingmar.com

18:45to read all of the in-depth things, see his charts, and you can use the code podcast 20 to

18:50get 20% off

18:51of a subscription, which gives you, you know, access not only to Logan stuff, but all the other great

18:56stuff on our site. Thank you, Sarah. And I'm just, I'm going to reinforce this. Some of you are going

19:02on TikTok, Instagram, and Facebook. If the guy who's telling you you're on a recession is basically

19:07looks like he doesn't have a job and he looks like he hasn't been on a date in 10 years,

19:12don't listen

19:12to him. Block him. You need to follow more intelligent people because I get these things daily. And I'm

19:18like, this guy, really? You're hearing this? Look at him. It's like a jackrabbit jackass jumping up and

19:26down. Oh, we're going to verge of a 25% unemployment or the stocks are, you know, all this. These

19:31people are

19:31here to take sucker you in. It's not data adults. Yep. Rage bait, click bait. That's why we're glad

19:38we have you. Okay. We will talk to you again soon. Thanks, Logan.

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