U.S. Jobless Claims Fall as Housing Starts Slow and Homes for Sale Surge

The US labor market showed resilience last week, with jobless claims dropping by 5,000 to 245,000, according to the Department of Labor. This unexpected decline suggests that most people are still working, and layoffs remain in check.

But the real story is unfolding in the housing market, where builders are hitting the brakes. In May, new home starts dropped nearly 10% and building permits fell by 2%.

Meanwhile, the number of homes for sale is up almost 23% from last year. At first glance, this should mean lower prices and more options for buyers. However, the outlook is far from straightforward.

A major reason for the slowdown in new construction is uncertainty about future demand. The Trump administration’s plan to deport millions of undocumented immigrants has builders and investors worried.

If hundreds of thousands—or even millions—of people are forced to leave the country, many apartments and houses will soon be vacated and hit the market all at once.

This looming surge in available homes makes builders reluctant to start long-term projects now, since it could push prices down and leave them with unsold inventory. This logic is simple: when everyone expects a big increase in supply, the risk of falling prices rises, and developers pull back.

Builders are not just reacting to mortgage rates and construction costs; they are also factoring in the potential for a sudden drop in demand if mass deportations go ahead.

As a result, the slowdown in new home construction is as much about future expectations as it is about current market conditions. At the same time, the dairy and oil markets are facing their own changes.

The US Department of Agriculture expects milk production to rise slightly this year, up 0.4%, but farmers still face challenges like disease outbreaks and export barriers.

Oil stockpiles dropped by more than 11 million barrels last week, but prices fell due to other market pressures. In summary, while jobless claims are down and the labor market is steady, the US housing market is being shaped by policy uncertainty.

The prospect of mass deportations is making builders cautious, as they anticipate a wave of vacant homes that could flood the market and drive prices down.

This is not just theory—builders are already slowing down, waiting to see what happens next. The next few months will show whether these fears come true, but for now, the market is on pause.