Both the FHFA and Case‑Shiller released the latest update on home price appreciation this week. Actually, in the current case, it’s more like home price depreciation (at least in month over month terms). This is a bit confusing because average prices were higher versus the previous month, but that is virtually always true at this time of year.  Seasonal adjustments are very useful for data like home prices (which have a reliable cadence that follows the typical homebuying seasons).  It’s after adjusting for seasonality that we see emerging signs of weakness.  FHFA House Price Index (seasonally adjusted, MoM)
May: −0.2%; April was revised from −0.4% to −0.3%
YoY: +2.8% from May 2024 to May 2025
Monthly figures varied regionally: Middle Atlantic showed the steepest fall at −0.8%, while West South Central and New England saw modest gains of +0.3%. All nine census divisions remain positive YoY, ranging from +0.6% to +5.9%. Case‑Shiller National Index (unadjusted)
YoY: +2.3% in May, down from +2.7% in April
MoM (raw): +0.4%
MoM (seasonally adjusted): −0.3%
This marks the smallest annual national gain since July 2023 and the third consecutive monthly decline in seasonally adjusted data. Seasonally Adjusted Comparison Table: FHFA vs Case‑Shiller (May 2025)

Index
MoM (SA)
YoY

FHFA HPI
−0.2%
+2.8%

Case‑Shiller
−0.3%
+2.3%

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Month-End Volatility Erodes Modest Gains

Bonds were slightly stronger in the overnight session and this morning’s economic data did little to change that.  The initial reaction may have involved a modicum of selling, but it was fully erased by 11:15am.  The PM hours saw both stocks and bonds paring long positions for July’s final marks. The typical closing bells (3pm and 4pm) accounted for most of the losses. Bonds ultimately gave up all of the overnight gains, but remain close enough to ‘unchanged’ heading into Friday’s big jobs report. 

Econ Data / Events

Challenger layoffs (Jul)

62.075K vs prev 47.999K

Continued Claims (Jul 19)

1.946M vs f’cast 1.960M, prev 1.955M

Core PCE (m/m) (Jun)

0.3% vs f’cast 0.3%, prev 0.2%

Core PCE Inflation (y/y) (Jun)

2.8% vs f’cast 2.7%, prev 2.7%

Employment costs (Q2)

0.9% vs f’cast 0.8%, prev 0.9%

Inflation-Adjusted Spending (Consumption) (Jun)

0.3% vs f’cast 0.4%, prev 0.0%

Jobless Claims (Jul 26)

218K vs f’cast 224K, prev 217K

Personal Income (Jun)

0.3% vs f’cast 0.2%, prev -0.4%

Market Movement Recap

08:34 AM Little changed from stronger overnight levels after data.  MBS are up just over an eighth and 10yr yields are down 3bps at 4.345

11:49 AM resilience into late AM hours.  10yr down 4bps at 4.335 and MBS up an eighth

02:40 PM 10yr yields still down 1.6 bps at 4.359, but at highs of day. MBS are still up 2 ticks (.06), but at the lows of the day.

04:04 PM weakest levels.  MBS unchanged and 10yr down only half a bp at 4.369

Mortgage rates went to bed last night knowing that the bond market would need to improve in the morning in order for prevailing levels to be maintained. In other words, bonds had begun losing ground yesterday, but not enough for mortgage lenders to go to the trouble of re-issuing rates (something they prefer to do as little as possible). Thankfully, this morning’s economic data was close enough to expectations that bonds managed to hold onto modest overnight improvement. With that, the average lender was able to set today’s rates right in line with yesterday’s.  Incidentally, these are the lowest levels since July 3rd, when the last jobs report came out and caused a quick but fairly tame increase. Tomorrow morning brings the next installment of the jobs report.  As far as bonds/rates are concerned, this is the most important scheduled economic data on any given month. The market is positioned as well as it can be for a stronger or weaker outcome. If job growth is stronger, it would likely result in rates moving higher and vice versa.

Below is a table that consolidates the results of various econ reports as well as NFP precedents that speak to the odds of NFP moving higher or lower in tomorrow’s data. Credit for this concept and collation of the data goes to our friends at BMO’s US Rates Strategy desk.
The “beat/miss/match” row refers to the percent of previous July payroll counts beating, missing, or matching the forecast.

Jobless Claims

Report
Result
NFP Implication

Initial Claims (NFP week)
221k vs 233k f’cast
Higher

Continuing Claims
1946k vs 1951k prior
Higher

Private Payrolls

ADP Employment
104k vs 76k f’cast
Higher

Liscio Estimate
105k vs 104k consensus
Neutral

Unemployment Report History

Beat / Miss / Match (July)
42% / 35% / 23%
Mixed / Slightly Higher

Labor Differential
11.3 vs 12.2 prior
Lower

Regional Fed Surveys

Empire State – Employees
9.2 vs 4.7 prior
Higher

Empire State – Workweek
4.2 vs -1.5 prior
Higher

Philly Fed – Employees
10.3 vs -9.8 prior
Higher

Philly Fed – Workweek
0.4 vs -1.6 prior
Higher

Other Indicators

Challenger Job Cuts (July)
62,075 vs 47,999 prior
Lower

Payroll Seasonality (ex-2020)
Miss 54%, Beat 46% (avg ±60k)
Slightly Lower

As hundreds of attendees add Bob Seger, Madonna, Eminem, and Stevie Wonder to their playlists in preparation for the MMLA conference starting this weekend in Michigan, and my son Robbie hunkers down in the rain in Sheboygan, WI., I received this note. “We’re a nationwide lender and have begun the hunt for a new AMC. Any suggestions?” Nope, but a solid place to start is at this Marketplace, a free centralized hub for vendors and service providers across the mortgage industry to be viewed by lenders. You may be nationwide, but all real estate is local, with different pros and cons. For example, at the MBA Hawai’i conference, HOA and insurance costs are weighing heavily on their markets. Inventory levels have crept up, the fire damage in Maui is a multi-year exercise in figuring out what to re-build and how to do it with limited manpower and materials. Interest by Japanese, Chinese, and Canadian buyers has plummeted. But there is opportunity: 38 percent of Hawaiian residents are renters. (Today’s podcast can be found here and this week’s are sponsored by nCino. nCino Mortgage unites the people, systems, and stages of the mortgage process into a seamless end-to-end solution embedded with data-driven insights and intelligent automation. Hear an interview with nCino’s Tyler Prows on how automated workflows provide a seamless experience for the borrowers and streamlined app intake for LOs in an end-to-end solution.) Products, Services, and Software for Lenders and Brokers