The hidden reason mortgage rates won’t drop yet | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

For those hoping to buy a home soon, employment data is a double-edged sword. In my years of reporting on the real estate market and mortgages, I’ve witnessed the good and the bad of unemployment‘s impact on homebuyers.

On one hand, higher unemployment rates are risky. If you’re among those who lose their jobs, you might not be able to afford a home or even qualify for a mortgage loan.

But if you keep your job and are financially stable, higher unemployment rates may benefit you.

When unemployment rises, mortgage rates typically go down.

Mortgage rates during tougher times

In fact, mortgage rates tend to decrease overall when the economy struggles.

Why? Because if Americans are financially scrambling, lower rates make it more affordable to take out loans. Mortgage rates increase when the economy does well, in part because financial security encourages people to buy houses, and this increased demand pushes up interest rates.

The Redfin Economists’ Weekly Take says that the main thing Americans should keep an eye on to sense where mortgage rates are headed — other than news about the Iran war — is the economic data coming out the week of May 4-8.

Several employment data reports were released in those few days, each providing different information about the jobs market. So, how can we expect mortgage rates to respond to the latest jobs reports?

The overall message from this week’s employment data

Two jobs-related reports came out on May 5: the March Job Openings and Labor Turnover Survey (JOLTS) and the April ISM Services PMI Report.

JOLTS, released by the U.S. Bureau of Labor Statistics, showed the number of job openings in March. The job openings rate was 4.2% in February and ticked down to 4.1% in March. Essentially, the numbers were flat.

The ISM Services PMI Report, provided by the Institute for Supply Management, tracks employment in the manufacturing and services sector. The job numbers came in a little lower than predicted, but the sector expanded for the 22nd straight month. So, this report was a bit of a mixed bag.

The April ADP Employment Report came out on May 6. This report assesses the private-sector labor market. Private companies added 109,000 jobs last month, exceeding expectations. This report resulted in positive news for jobs (or bad news for mortgage rates).

Thursday, the Department of Labor released weekly jobless claims data. Initial claims for unemployment benefits increased by 10,000 for the week ending on May 2, however, the previous week’s seasonally-adjusted new claims number was only 190,000. That’s the fewest claims since 1969. So, new jobless claims are still relatively low, which is probably bad for mortgage rates.

The Big Kahuna of employment data for the week came on May 8 when the Bureau of Labor Statistics published the April jobs report. The U.S. added more nonfarm payroll jobs than expected, but the unemployment rate was unchanged since March, sitting at 4.3%. Overall, this is neutral news for mortgage rates.

How are mortgage rates reacting to employment data?

Let’s start with Freddie Mac mortgage rates, perhaps the most well-known national rates. Freddie Mac tracks national rates from noon ET on Thursday through 11:59 p.m. ET the following Wednesday. It then publishes them at noon ET on Thursday, according to the organization’s methodology.

When Freddie Mac published its rates on Thursday, May 7, it had processed rates from mortgage applications following all of employment data published through Wednesday.

The result? Mortgage rates increased for the second week in a row and reached a four-week high. The Freddie Mac national average 30-year fixed mortgage rate is currently 6.37%.

Those mortgage rates clearly responded negatively to data from JOLTS, the ISM Services PMI Report, and the ADP Employment Report (along with other factors, such as the conflict in the Middle East). But Freddie Mac finished collecting data before Thursday or Friday jobs data came out.

More on mortgage rates and the housing market:

A great tool for tracking daily mortgage rates is Mortgage News Daily, which typically updates its rates on weekdays at 4 p.m. ET. The 30-year and 15-year fixed conforming rates reported by MND did not budge from Wednesday to Thursday, meaning the May 7 weekly jobless claims did not impact mortgage rates.

The weekly conforming MND rates had each dipped by just one basis point.

After the April jobs report dropped on May 8, the MND 30-year fixed rate decreased by two basis points to 6.42%, and the 15-year rate inched down by one basis point to 5.99%.

Mortgage rates have been volatile in 2026 in that they oscillate between increasing and decreasing. But even within that volatility, rates only move by a couple of basis points here and there.

There was a mixture of positive, negative, and neutral employment data released the week of May 4-8. In response, mortgage rates also ticked down, ticked up, and held steady depending on the day of the week.

The bottom line is that we don’t know what mortgage rates will do tomorrow or next week, but they probably won’t change drastically. So, homebuyers shouldn’t try to time the real estate market based on what home loan rates are doing. If you’re waiting for them to plunge, you could be waiting for a long time.

Upcoming economic reports that will affect mortgage rates

If there’s one thing that could help mortgage rates swing drastically in either direction, it would be news regarding the Iran war. Economic reports still impact rates, though, so here are ones to watch in the near future.

The Department of Labor releases the weekly jobless claims every Thursday. If this data continues to trend in the same direction week after week, it could move mortgage rates.
The April Consumer Price Index (CPI), a key measure of inflation, comes out on May 12. Higher inflation usually pushes up mortgage rates, one reason being that it’s a sign that the Federal Reserve could hold the fed funds rate steady or even hike it soon.
On May 28, the April Personal Consumption Expenditures (PCE) Price Index is released. The PCE Price Index is another measure of inflation — one that the Fed takes even more seriously than the CPI. The PCE differs from the CPI by updating its item weights more often and tracking a wider scope of factors.
There is no Federal Reserve meeting in May. The next one is scheduled for June 16-17. This gives the Fed more time to assess employment and inflation data and decide how to act not just at the June meeting, but at the rest of the 2026 FOMC meetings.