As with many economic circumstances, the timing of developing events can play a major role in determining future outcomes.
And often, that timing is a matter of bad luck.
One current example of this reality involves the Sept. 17 Federal Reserve interest rate cut by 25 basis points, which offered home sellers and buyers hope for a return to lower mortgage rates.
That event was followed only two weeks later (Oct. 1) by the unfortunate federal government shutdown, as lawmakers were unable to reconcile competing priorities before the fiscal deadline.
An immediate consequence of the shutdown was that the September jobs report was unable to be released as previously scheduled on Oct. 3.
“At a moment when the labor market could be at an inflection point, policymakers, financial markets, businesses, and consumers are losing one of their most valuable guideposts,” wrote Realtor.com senior economist Jake Krimmel.
How the lack of jobs data affects housing market, mortgage rates
Krimmel explained two ways the absence of the September jobs report impacts mortgage rates and the housing market.
First, he noted that it makes for a murkier outlook.
“The housing market is already under pressure from high mortgage rates, the lock-in effect, and weak demand,” Krimmel wrote. “A robust and dynamic labor market fuels the housing market’s engine: consumer demand. Without clarity on whether jobs are slowing further, we can’t accurately gauge the headwinds facing the market.”
The lock-in effect refers to homeowners’ reluctance to sell or refinance because their existing mortgage rates are significantly lower than current market rates.
Related: Zillow sounds alarm on worrying housing market, mortgage concern
Second, Krimmel calls attention to how mortgage rates react to policy uncertainty.
“Labor data feeds directly into Fed decisions, which anchor the 10-year Treasury and, by extension, mortgage rates,” Krimmel wrote. “Without that benchmark, it’s harder to predict exactly what the Fed will do at its next meeting, with another 25 bps cut, a 50 bps move, or a pause all on the table.”
“That ambiguity can widen spreads and inject volatility into mortgage rates at a moment when stability is needed,” he added.
The missing jobs report affects the Fed’s future interest rate decisions
This report would have played a significant role in shaping the Federal Reserve’s thinking ahead of its October 28–29 FOMC meeting, Krimmel explained.
Fed Chair Jerome Powell characterized the recent 25 basis point rate reduction as a precautionary step, weighing inflationary pressures against signs of labor market weakness.
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- Berkshire Hathaway HomeServices explains housing market changes
- Fannie Mae forecasts mortgage rate shakeup
In the absence of updated data, the Fed faces greater uncertainty in deciding whether to maintain its current stance or adjust policy further.
More critically, with three weeks remaining until the next meeting, market participants are left with limited guidance on what direction the Fed might take.
“The lack of a central data benchmark means it’s more difficult to read policymakers, injecting uncertainty and volatility into financial markets, ultimately making the Fed’s job more challenging,” Krimmel wrote.
That same uncertainty and volatility factor impacts mortgage rates downstream.
The government shutdown increases reliance on other data
- If the shutdown continues, key economic reports — including the October 15 Consumer Price Index (CPI) release — may be delayed or canceled.
- Without official data, analysts must rely on alternative sources that are less consistent and more prone to noise.
- The September ADP employment report indicated a loss of 32,000 jobs, though its reliability is widely questioned.
- Labor metrics from the Chicago Fed suggest unemployment remains near 4.3%, with a slight upward bias.
- Those models show declining hiring activity while separation rates stay steady, pointing to a gradual labor market slowdown.
- If accurate, the unreleased jobs report likely resembled August’s: reduced hiring momentum without a rise in joblessness.
Housing market slowed by economic uncertainty
The concern with delayed official data is the loss of a common reference point used by policymakers, investors, and the public to interpret economic conditions, Krimmel emphasized.
In its absence, reliance shifts to less reliable sources, increasing uncertainty, complicating forecasts of Federal Reserve actions, and impairing effective economic decision-making at all levels.
“Right now, the labor market is losing momentum while the housing market is stuck in a low gear,” Krimmel wrote. “There are fewer job switches, fewer home sales, and fewer signs of dynamism.”
“While stagnation is not catastrophic, it does raise the risk of a drag on future growth,” he continued. “And without a jobs report, that risk is harder to measure and harder to manage.”
Related: Bank of America jobs data may sway Fed interest rate cut bets
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