More Unemployed Than Job Openings for First Time Since April 2021 — What It Means for Mortgage Rates and the Housing Market

For the first time since April 2021, the number of unemployed Americans has surpassed the number of available job openings. According to July’s Job Openings and Labor Turnover Survey (JOLTS), job openings fell to about 7.18 million, while the pool of unemployed workers slightly exceeded that figure. This reversal signals a meaningful cooling in the labor market after years of tight conditions, raising new questions about the Federal Reserve’s next move and what this shift could mean for mortgage rates and the housing market.

Mortgage rates have already begun to reflect the softer economic backdrop. The average 30-year fixed mortgage rate recently dipped to under 6.5%, its lowest level in nearly a year. However, despite cheaper financing, many potential buyers remain cautious. Applications for new home loans fell 3% from the previous week, according to the Mortgage Bankers Association, showing that affordability challenges and broader economic uncertainty are still weighing on demand. On the other hand, refinancing activity has started to climb, suggesting that homeowners are beginning to take advantage of the drop in rates.

The key driver behind these moves is the expectation that the Federal Reserve will shift toward cutting interest rates. With the labor market cooling and inflation trending lower, bond yields have fallen as investors anticipate Fed action. Markets are now pricing in a strong likelihood of a 25-basis-point cut at the Fed’s September meeting, with the potential for further easing later in the year. Since mortgage rates are closely tied to Treasury yields, any sustained decline in bond yields could translate into even lower mortgage rates heading into late 2025 and early 2026.

For the housing market, the implications are significant. Lower borrowing costs could gradually restore affordability, especially for first-time buyers who have been priced out during the high-rate environment of the past two years. As mortgage rates trend downward, more buyers may return to the market, creating fresh demand for listings. At the same time, sellers are beginning to adjust, with some lowering asking prices or offering concessions to meet the market. This dynamic could lead to a more balanced environment after years of volatility.

Still, challenges remain. While declining mortgage rates are a welcome relief, home prices in many markets remain elevated, and wage growth is slowing alongside the labor market. Buyers may be more selective, and sellers may need to reset expectations. The near-term outlook suggests a housing market in transition—one where lower rates could unlock pent-up demand but broader affordability and economic confidence will ultimately determine the pace of recovery.

Bottom line: For the first time in over four years, unemployed workers now outnumber job openings, marking a turning point in the labor market. This shift is already helping to push mortgage rates lower, with further declines possible if the Fed follows through with rate cuts. For homebuyers and sellers alike, the coming months could bring new opportunities, but also continued adjustments as the housing market responds to a changing economic landscape.