March 10, 2025 – U.S. Employers added 151,000 new jobs in February, in line with most expectations, with unemployment coming in at 4.1%. Since December, the U.S. economy has average about 200,000 new jobs a month, meaning this report is generally in line with recent trends. Still, the jobs report has been overshadowed by economic uncertainty stemming from the United States’ trade policy. On March 4, the White House announced 25% tariffs on Mexico and Canada, causing the stock market to lurch; later, automakers and goods protected under a 2018 trade agreement were exempted until April 2^nd. Dipping mortgage rates have led to a surge in refinance activity so far in 2025, while consumer sentiment towards the housing market declined year-over-year for the first time since 2023, according to Fannie Mae, echoing longstanding concerns in the housing market about affordability and the effects of mortgage rates remaining elevated.

February jobs report shows U.S. employers added 151,000 jobs: U.S. employers added 151,000 jobs in February, and unemployment inched up to 4.1%, still low by historical standards. Federal government employment dipped by 10,000 in February and further decline is expected as recent attempts to trim the Federal workforce will likely be seen in the coming months’ jobs reports. Healthcare had the most robust job gains, adding 52,000 jobs, in line with its 12-month average. Other positive gain sectors were financial activities (21,000), transportation and warehousing (18,000), and social assistance (11,000). Retail declined by 6,000. Labor force participation came in at 62.4%, the lowest since January 2023. An unemployment measure that includes discouraged workers (those who have stopped looking for work because they cannot find a job) and workers holding part-time positions out of economic necessity, rose to 8%, a level not seen since October 2021. Overall, the jobs report showed that the U.S. economy remains stable and strong.  Economic uncertainty is coming from other sources.

Changes in tariff policy bring uncertainty: While the jobs report may not have caused a lot of volatility in the market, recent trade policy was anything but stable. The week started with renewed 25% tariffs on Mexico and Canada, triggering a sell-off on Wall Street, before the tariffs were again postponed, and the market entered correction territory. The monthly Trade Policy Uncertainty index reached its highest-ever level in February. The previous high point was at the start of the pandemic. Admissions from the White House that tariffs may cause temporary economic harm, including possible upward inflationary pressure and price increases, renewed recession fears and resulted in the leading stock indices plummeting sharply at the start of this week.  The Nasdaq Composite dropped by 4% and the S&P 500 fell by 2.7%. Ten-year treasury yields declined as well, settling at 4.213%. The S&P is now lower than it was after the election in November. Uncertainty about tariffs may be slowing down economic activity as business owners try to calibrate how tariffs will impact their bottom lines.

Mortgage refinance activity jumps with decline in mortgage rates: The weekly Refinance Index published by the Mortgage Bankers Association (MBA) jumped to its highest level since October 2024. With the average 30-year Fixed Rate Mortgage reaching the lowest level in nearly three months, mortgage-holders took the opportunity in droves to refinance. Rates are falling alongside 10-year Treasury yields, which have dipped in recent weeks as the broader financial markets look at how the Trump administration’s policies will play out.  Refinance activity increased 37% over the previous week and was up 83% from the same week a year ago. Conventional refinance applications rose 34% and refinances of government-backed loans rose 42% over the past week. Refinance activity, however, is still much lower than peaks seen in 2020 and 2021, when more homeowners benefited from a change in rates. Purchase activity, which refers to home buyers applying for mortgages to purchase a home, also rose 9% from a week ago, according to MBA. If rates continue to fall, expect more refinancing in the future. 

Consumer sentiment about the housing market declines year-over-year for the first time since 2023: Fannie Mae released its February Home Purchase Sentiment Index (HPSI), and it showed declining consumer confidence in the housing market. Three out of four (76%) respondents still believe it is not a good time to buy a home because of high prices, while the share of respondents who say it is a good time to buy climbed to 24%. Interestingly, the share of respondents expecting mortgage rates to decrease dipped to 30%. The decline in consumer sentiment reflects the current conditions of the housing market, including affordability concerns and a continuing lack of supply. Some buyers have adjusted to elevated mortgage rates, but for many Americans, affordability remains a significant obstacle. Forecasts from Fannie Mae predict that home sales in the U.S. will remain muted.

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