Jobs week is off to a strong start, with a big jump in job openings (JOLTs) and the biggest growth in private employment (ADP) we’ve seen in 18 months.

A sudden jump in job openings. The April JOLTs (Job Openings & Labor Turnover) report revealed a dramatic 11% month-over-month jump in total job openings to 7.6 million. That was way above Wall Street expectations. But the hiring rate remained low. [BLS]

TP: It’s intriguing that 91% of the job openings growth in April came from one category: Professional & Business Services. Look at that spike at the end of the graph: the highest level of P&BS job openings since April 2023. I suspect there’s something odd happening here statistically. Either that, or job openings have truly bottomed.

Solid private employment growth. ADP reported that private companies added 122,000 jobs in May. That was the highest monthly figure since January 2025. The annual wage increases for “job stayers” (+4.4% YoY) and “job changers” (+6.5% YoY) haven’t changed much in the last nine months.

TP: What are we to make of one of the strongest months for job openings and jobs growth we’ve seen in a long time? Is the economy stronger than it looks (1Q GDP was +1.6% annualized)? Or is the AI boom actually net creating jobs?

BLS jobs report out today. The market is looking for ~85,000 jobs to be added in May. But BLS reported +115,000 jobs in April, and the most recent data from JOLTs and ADP has been quite strong. But, as always, just about anything can happen when it comes to the BLS report.

Cotality is sticking to its guns. The data provider reported that national home prices rose just 0.3% year-over-year in April. Despite this, they’ve actually raised their forecast for annual home price growth to +5.3%. (That’s $23,000 in capital appreciation using Cotality’s median home price of $417,500.)

TP: What are they seeing that gives them such confidence? They never mention it, but I’m pretty sure that they have an aggressive estimate for mortgage rates — finishing 2026 somewhere between 5.75% — 6.00% on the 30-year, fixed rate mortgage.

Buffet’s Berkshire Hathaway buys Taylor Morrison. The first acquisition for new CEO Greg Abel is an all-cash deal for $7 billion (24% premium to prior closing price). Taylor Morrison will be taken private and (over time) combined with BH’s existing housing assets. In case you didn’t know it, Berkshire Hathaway has a massive presence in the housing ecosystem.

TP: BH is paying 1x revenue, 9x earnings, and 0.9x book for Taylor Morrison. Those are cheap valuation multiples if you expect a cyclical upturn ahead. Taylor Morrison is focused on Sun Belt markets (Florida, Texas, Arizona) and higher-income move-up/lifestyle buyers (Esplanade resort living brand) rather than relying heavily on first-time-homebuyer demand.

Would you pay CGT if you sell? The current capital gains tax exclusion amounts are $250K for single filers and $500K for joint filers. The problem is that those exclusion amounts were set in 1997. Since then, home prices have risen ~3.5X! As a result the NAR estimates that over 25 million homeowners have gains >$250K and over 8 million have gains >$500K. That’s a lot of people paying a lot of CGT if they sell — another incentive for them to just stay in their home.

TP: These exclusion amounts were large at the time. The goal was clear: ensure that most homeowners don’t have to pay capital gains taxes when they grow their family and upgrade to a bigger/nicer home. Although several proposals, like the ‘More Homes on the Market Act’ (which would double the exclusion amounts) are in Congress, they seem to be moving slowly.

Bond and Mortgage Market

We’ve got a ceasefire, but shooting every day; and an imminent peace deal, but Iranian threats to close the Strait of Hormuz completely. In this highly uncertain environment, the bond market is assuming that oil-driven inflation will be with us for a while. Lower bond prices = higher bond yields = higher mortgage rates (in general).

As you can see below, the probability that the Fed keeps rates steady at its upcoming meetings has dropped. But that’s because the probability that the Fed is forced to RAISE interest rates has risen!

Note: The Fed Funds Rate policy range is currently 3.50–3.75%. The probabilities below come from the CME Group website and are implied from the Fed Funds Rate futures market.

• June 17 FOMC Meeting: This will be Kevin Warsh’s first meeting as the new Fed Chairman. 96% probability that the Fed Funds Rate will be kept at 3.50–3.75% (was 99% last week).
• July 29 FOMC Meeting: 88% probability that the Fed Funds Rate will be kept at 3.50–3.75% (was 91% last week) 8% probability that rates will be 25 basis points HIGHER than they are today.‍
• September 16 FOMC Meeting. 72% probability that the Fed Funds Rate will be kept at 3.50–3.75% (was 75% last week). A 23% probability that rates will be 25 basis point HIGHER than they are today (unchanged from last week).‍
• Rate hikes in late 2026? If I look way out to the last FOMC meeting of the year (Dec 9), the market is pricing in a 46% probability (was 52% last week) that the Fed Funds Rate will be exactly where it is today. Additionally, the market is now pricing in a 51% probability that rates will be at least 25 basis points (and maybe 50 basis points) HIGHER by year-end!

They Said It

“While the national housing market may seem flat, local markets continue to tell very different stories. Annual home price growth has changed little since the start of the year, but some markets, especially those supported by strong job and income growth in the West and more affordable Midwest markets, have seen notable acceleration in price gains.” — Dr. Selma Hepp, Cotality’s Chief Economist

“Berkshire is acquiring a best-in-class national homebuilder, led by an exceptional team and backed by a trusted reputation for customer experience. Over time, we expect to unify our site-built homebuilding operations into a combined platform enabling us to deliver the dream of homeownership to more Americans.” — Greg Abel, Berkshire Hathaway’s CEO