The latest jobs report for February 2025 came in under expectations, according to a release from the U.S. Bureau of Labor Statistics today. According to the report, 151,000 non-farm jobs were added to the payroll compared to the projected 170,000, and the unemployment rate moved up slightly month-over-month—from 4% in January to 4.1%.
Realtor.com® Chief Economist Danielle Hale wrote in a press release, responding to the jobs report, about why real estate professionals should pay close attention to the numbers so as to gauge potential demand.
“Labor market health is vital to the housing market. A still-low unemployment rate, ongoing wage growth and net increases in the number of jobs mean opportunities for workers who will need a place to live, driving up housing demand. But higher demand alone is not enough, and lagging housing supply in the face of strong demand has meant a lack of affordability and inventory that needs to be addressed,” she said.
Employment in the healthcare, transportation, financial, warehouse activity and social assistance sectors all increased. One big change in the results is the federal workforce; due to cuts by the new Trump administration, federal government jobs declined by about 10,000. This marks the first decline in federal employment since June 2022.
Mortgage Bankers Association (MBA) SVP and Chief Economist Mike Fratantoni said in a release that the federal workforce is likely to decline further in coming months. He also noted that MBA projects job growth will slow in 2025, and that the unemployment rate will reach 4.5% this year.
“Beyond these headline numbers, there was a marked increase in broader measures of unemployment, with the U-6 (accounting for underemployed people as well) increasing half a percentage point over the month, as more individuals took part-time jobs when they would prefer full-time work or were otherwise underemployed. This trend suggests that the underlying job market is somewhat weaker than the headline numbers suggest,” wrote Fratantoni.
Analyzing the number of job openings, Hale wrote: “Job openings totaled 7.6 million, down from both the prior month and prior year. The job openings rate also slipped to 4.5%, falling back below pre-pandemic highs (4.8%). Job quits, which can be a gauge of worker confidence, ticked up slightly to 3.2 million in December, but are down from 3.5 million one year ago. The job quits rate of 2% was unchanged and continues to hover below pre-pandemic highs (2.4%).”
The number of discouraged workers, or marginally-attached people who believe no jobs are available, declined by 128,000 to 464,000 in February.
National Association of REALTORS® Chief Economist Lawrence Yun also said in a release that “some signs of cracks in the economy are emerging,” due to the slower pace of job growth and wage gain (4%) outpacing the inflation rate (around 3%), which will raise the cost of living. However, Hale described current wage growth as in the “goldilocks range with average hourly earnings up 4% in the last year. This is high enough to propel real wage growth, but not so high as to raise inflation concerns.”
“If mortgage rates decrease further due to weakening in the job market, home sales will likely rise. The influence of lower rates generally outweighs job losses,” wrote Yun. “Ideally, adding jobs and decreasing mortgage rates would be preferable, but that scenario is more complex.”
Writing about how these results should affect interest rates, Fratantoni wrote that these numbers will likely not push the Federal Reserve to adjust monetary policy.
“These data came in quite close to market expectations and hence should not result in much change concerning Fed policy. MBA anticipates that the Fed will keep their target rate steady through the next quarter, but will likely cut one more time this year as inflation moves slowly to target and the job market softens,” wrote Fratantoni.
For the full jobs report, click here.
