MBS Road Signs 8-11-2025
MBS Road Signs 8-11-2025
Week of August 4, 2025 in Review
Annual home prices continue to move higher, while unemployment claims show a concerning trend – two important updates in an otherwise quiet week. Read on for the key takeaways.
Homeownership Continues to Be a Solid Investment
Continuing Unemployment Claims Reach 4-Year Peak
What to Look for This Week
Technical Picture
Homeownership Continues to Be a Solid Investment
Recent data from Cotality (formerly known as CoreLogic) shows home prices edged up 0.1% from May to June and increased 1.7% year-over-year. ICE also reported similar trends, with a 1.3% annual price gain in early June.
What’s the bottom line? While home price growth has moderated compared to recent years, industry experts remain confident in the market. Cotality is projecting a 0.5% rise in prices for July and anticipates a healthy 4.2% increase over the next 12 months.
This continued appreciation underscores why real estate is still one of the most reliable ways to build long-term wealth. For example, a $500,000 home appreciating at 4% would gain $20,000 in just one year – highlighting the strong return potential of homeownership.
Continuing Unemployment Claims Reach 4-Year Peak
Initial jobless claims rose by 7,000 to 226,000, coming in above forecasts though remaining low on a historical basis. The more telling figure remains continuing claims – the number of people still receiving unemployment benefits after their first week. These rose by 38,000, reaching a new cycle high of 1.974 million, and the highest level since November 2021.
Continuing claims have held stubbornly above 1.8 million for over a year and are now consistently above 1.9 million for eleven straight weeks.
What’s the bottom line? The Federal Reserve closely monitors employment data when making decisions about interest rates. It operates under a dual mandate: to keep inflation in check and support maximum employment. However, these goals can sometimes be at odds. High inflation typically prevents the Fed from lowering rates, while signs of an economic slowdown may prompt it to consider doing so.
So far this year, the Fed has kept its benchmark interest rate, the Federal Funds Rate, unchanged. Ongoing economic uncertainty, including new tariffs and persistent inflation concerns, has led the Fed to take a cautious “wait and see” approach.
While the Fed Funds Rate doesn’t directly set mortgage rates, it does influence borrowing costs across the broader economy.
Recently, signs of a weakening job market – such as the softer July jobs report and a steady rise in unemployment claims – have fueled speculation that the Fed could cut rates at its next meeting on September 17.
Looking ahead, upcoming inflation and employment reports will play a key role in shaping the Fed’s next move.
What to Look for This Week
Inflation data will be the focus, beginning with the July Consumer Price Index (CPI) on Tuesday, followed by the Producer Price Index (PPI) on Thursday. Weekly Jobless Claims will also be released on Thursday, and the week wraps up with July Retail Sales on Friday.
Technical Picture
Mortgage Bonds spent the week in a wide range between support at 101.76 and resistance at 102.09. The 10-year Treasury trended higher and ended the week just under resistance at 4.292%.