Hello Friends,
Happy Father's Day to all the dads, grandfathers, stepfathers, and father figures who make a difference every day. Your guidance, sacrifice, and support help shape families and communities, and this week we celebrate you. I hope you enjoy a wonderful Father's Day surrounded by family, friends, and those you love.
As we move through June, this week's economic and housing data delivered several encouraging surprises. Strong job growth, improving home sales activity, and relatively stable core inflation suggest that both the economy and housing market continue to show resilience despite higher interest rates.
Strongest Jobs Report in Months
The U.S. economy added 172,000 jobs in May, significantly exceeding expectations of 85,000 new jobs. Even more encouraging, previous reports for March and April were revised upward by an additional 93,000 jobs. The unemployment rate remained steady at 4.3%, while wages increased 3.6% year-over-year.
This was one of the strongest employment reports we've seen in quite some time. Unlike many recent reports, there were no significant downward revisions, and the labor market continues to demonstrate underlying strength. The primary concern remains the continued shift from full-time positions toward part-time employment, but overall the labor market remains healthy.
Existing Home Sales Move Higher
Existing home sales increased 3.2% in May compared to April and were also up 3.2% from a year ago, reaching an annualized pace of 4.17 million homes. This marks the strongest sales pace since December 2025 and is particularly noteworthy considering mortgage rates remained near 6.5% during the month.
Median home prices rose 1.3% year-over-year to $429,000.
One of the most encouraging developments is that affordability has improved compared with late 2023. Between lower home prices in many markets and somewhat lower mortgage rates, monthly principal and interest payments can be approximately $800 to $1,000 less per month today than they were at the peak of affordability challenges in October 2023.
I'm closely watching the South, which represents nearly half of all existing home sales and appears to be benefiting from improved affordability. I'm also watching the West, where several markets, including San Francisco, continue to show impressive strength.
Inflation Mixed but Core Inflation Remains Stable
Headline Consumer Price Index (CPI) rose to 4.2% year-over-year in May, up from 3.8% in April. Much of the increase was driven by energy prices, particularly gasoline, which was up 41% compared with a year ago.
The more encouraging news came from Core CPI, which excludes food and energy prices. Core inflation increased only slightly to 2.9% from 2.8% the prior month.
Most of the increase in core inflation came from shelter costs and airline fares. Outside of those categories, many components were flat or even declined, including used vehicle prices and auto insurance premiums.
Bond and Mortgage Market Update
The Federal Reserve meets next week, and markets overwhelmingly expect no change to the current Fed Funds Rate range of 3.50% to 3.75%.
Current market expectations indicate:
• June Meeting: 98% probability of no rate change.
• July Meeting: 88% probability of no rate change.
• September Meeting: 62% probability of no rate change, with increasing odds of a future rate hike.
Interestingly, the bond market is now pricing in a growing possibility that rates could actually move higher later in 2026 if inflation pressures persist, particularly those related to energy costs.
Quote of the Week
"More Americans are on the move, with home sales rising to the highest level since December. This is great news for the housing market and the economy. Improving affordability is helping drive this momentum."
— Lawrence Yun, Chief Economist, National Association of Realtors
My Take
This week's data paints a picture of an economy that remains remarkably resilient. Strong job creation, rising home sales, and relatively stable core inflation suggest that buyers and sellers are gradually adapting to today's interest rate environment.
While mortgage rates remain higher than many would like, improving affordability and growing inventory continue to create opportunities for both buyers and sellers. As always, every local market behaves differently, and understanding your neighborhood's trends remains the key to making informed real estate decisions.
If you're thinking about buying, selling, investing, or simply want to understand how these national trends may affect your local market, I'd be happy to connect and discuss your goals.
Thank you for your continued support, trust, and referrals. They are sincerely appreciated and remain the foundation of my business. I am grateful for the opportunity to serve you, your family, and your friends.
Wishing you and your family a wonderful Father's Day week.
Warm regards,
