Wishes don't make the trapped housing market go away

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Published Date 8/4/2025

Numbers are numbers. Facts are facts and wishing for something different doesn’t make it so.

So here’s the scoop: According to Realtor.com’s chief economist, Danielle Hale, the July jobs report job growth slowed to a net gain of just 73,000, while the unemployment rate ticked up slightly to 4.2%.

The strangest thing about it? While this would have been considered a slowdown from last month’s surprisingly high figure, it had been revised so much lower that the most recent reading was actually a modest increase. The health care and social assistance industries saw the biggest job gains while the government shed workers like flakes falling off a donut.

“The relative stability in the unemployment rate highlights a phenomenon that Chair Jerome Powell called out in comments following the Fed’s July meeting last week,” says Hale. “Even as hiring, or labor demand, has slowed, labor supply has also slowed, keeping the labor market relatively balanced. Meanwhile, earnings climbed by 3.9%, modestly above recent readings.”

The June JOLTS report showed a drop in both quits and job openings. Both moves are a sign of tighter conditions for job seekers, even though the job openings rate of 4.4% remains elevated relative to its pre-pandemic average. It now hovers near post-pandemic lows.

“The job market remains relatively healthy – at a level that would be expected to contribute favorably to housing demand,” says Hale, but her caveats include a housing market weighed down by persistent unaffordability. “Data released this week showed that the homeownership rate dropped to 65% in the second quarter," she says.

Recent data shows that even though the number of homes for sale continues to climb, the median list price has not changed nationally. In many markets, prices have begun to decline and, in some cases, have eased by double digits since mid-2022. “Still, homebuyer demand has been slow to revive, causing forward-looking sales indicators to stall,” Hale says.

She uses the example of New York City—where housing affordability has been front and center in the mayoral race—a report showed that even if rents were to freeze at today’s levels and income growth were to continue, it would take decades before the median rent would be “affordable” to the median earner.

Renter and homebuyer alike are in a continuous holding pattern, as both the for-sale and rental housing markets are hampered by unaffordability. While a steady labor market that powers income growth is necessary for housing demand, it’s not enough on its own, says Hale. “Housing demand will recover faster if costs soften, by either lower home prices or lower mortgage rates.”

As for housing supply? It will hopefully further stem home price growth by reducing barriers to construction in the areas where housing is most needed. Indeed – we can wish and we can hope for a combination of a number of factors to change, but no one is betting on it any time soon. “Getting the economy to a place where the inflation threat has passed and interest rates, including mortgage rates, can ease will also improve affordability both directly and indirectly by lessening the current lock-in effect,” surmises Hale. “Rather than one quick fix, I expect to see all of these levers contribute to restoring housing affordability.”

Realtor, TBWS

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American Home Lending USA, LLC - NMLS ID: 71983. To verify licensing, visit NMLS Consumer Access (www.nmlsconsumeraccess.org). Equal Housing Lender.

Jeff Beck

President

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American Home Lending USA, LLC

240 S Buchanan St, Edwardsville IL 62025

Company NMLS: 71983

Office: 618-310-0091

Cell: 618-806-2281

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