Market Volatility and The Aging Homebuyer
By Ryan Schoen, Principal Market Analyst
Quick Hit
Volatility has returned to the stock market driven by a shocking surge in job cuts in October. The rise in volatility correlates to a drop in yields as heightened volatility typically drives a “flight-to-safety” trade among investors. If the trend holds true, we should anticipate further declines in stocks and yields ahead. However, much of this will depend on developments pertaining to the government shutdown, the Supreme Court decision on the legality surrounding tariffs, and tech sector earnings reports.
Key Points & Stats
1. As of now, the latest reading in the VIX has risen to 19.5, indicating that investors are neither overly optimistic nor pessimistic, but the direction of travel is one to pay attention to as it could be an early indicator that yields could drift lower from here, assuming the trend holds true.
2. Michael J. Burry's hedge fund Scion Capital took a big short position on Palantir (PLTR) and NVIDIA (NVDA) with puts valued at $912 million and $186 million, as of September 30th filings. This headline has captured attention as a prominent investor has called into question tech sector valuations tied to the AI trade.
3. Job cuts for October hit 153,074, the highest level for the month in more than two decades, with 2025 coming in at the worst year for layoffs since 2009, aside from the pandemic. The latest monthly reading represented a 175% increase from the 55,597 cuts in October 2024 and a 183% increase from the 54,064 job cuts announced one month prior.
4. Through October, employers have announced 1,099,500 job cuts, an increase of 65% from the 664,839 announced in the first ten months of last year.
5. Year-to-date layoffs have already surpassed all of the 2024 job cuts by 44%. Government, technology, warehousing, retail, and services are the top five industries experiencing the most layoffs.
6. Cost-cutting was the top reason cited by employers, responsible for 50,437 announced layoffs. Artificial Intelligence (AI) was the second-most cited factor, leading to 31,039 job cuts as companies continue to restructure and automate. AI has been cited for 48,414 job cuts this year.
7. The median age of first-time buyers rose to a record high of 40 years old, with the median repeat buyer hitting 62, and all buyers increasing to 59.
8. The share of first-time homebuyers in 2025 shrank to a historic low of just 21% of all buyers. Prior to 2008, the share of first-time buyers had a historic norm of 40%.
9. In 2025, 61% of all homebuyers are married couples, 21% are single women, 9% are single men, 6% are unmarried, and 3% fall into the “other” category.
Market Volatility Returns as Job Cuts Rise and Hiring Slows
Volatility has returned to the market this week as investors recalibrated their risk tolerance levels following non-government job market data which surprised to the downside. At the same time, investors continue to weigh their assessment of elevated tech sector valuations and what that means for future price action. The aftermath sent equities and yields lower, while the VIX rose to its highest level since October 17th.
The good news, assuming mortgage spreads remain the same, is that in general a rise in the VIX tends to equate to a fall in the 10-year Treasury yield. This is because a rising VIX, indicating heightened fear and expected stock market volatility, typically drives a “flight-to-safety” into less risky assets. You can see this relationship on the chart below. Although the correlation sometimes doesn't hold over rare periods of time, in general the stock market “fear gauge” is typically a good leading indicator of future market moves since its role is to measure the market's expectations of 30-day forward volatility in the S&P 500, derived from the prices of S&P 500 index options. A low VIX, when readings are under 15, suggests calm markets and investor complacency. A high VIX, when readings are above 30, indicates fear, uncertainty, or panic. As of now, the latest reading has risen to 19.5, indicating that investors are neither overly optimistic nor pessimistic, but the direction of travel is one to pay attention to as it could be an early indicator that yields could drift lower from here assuming the trend holds true.
Where markets trade from here in the short-term will depend on developments pertaining to the government shutdown and the U.S. Supreme Court decision on the legality of the Trump administration’s tariffs. If market participants believe that tariffs are going to be reduced, then we could see pressure build on the long end of the yield curve as lower tariff revenue should signal wider government budget deficits and more Treasury debt supply hitting the markets. If a final ruling removes tariffs completely then a larger bond market selloff be triggered, with stocks falling in the near term over fears of higher rates returning once again.
While no one can be certain how things will unfold, one well-known investor has placed a bet that the next move in the stock market might be lower. That famous investor is Michael Burry, who made a fortune betting against the housing market using credit default swaps (CDS) on mortgage bonds. This time around his hedge fund, Scion Capital, took a big short position on Palantir (PLTR) and NVIDIA (NVDA) with puts valued at $912 million and $186 million as of September 30th filings. With that said, all eyes will be on Nvidia's earnings announcement in two weeks, with hopes that they show strength to reaffirm the AI narrative and can continue to keep this bull market going.
As mentioned above, the news that came out spooking markets most recently was the announcement from Challenger, Gray & Christmas Inc. In their “Job Cut Announcement Report,” the firm noted that job cuts for October hit 153,074, the highest level for the month in more than two decades, with 2025 coming in at the worst year for layoffs since 2009 aside from the pandemic. The latest monthly reading represented a 175% increase from the 55,597 cuts in October 2024 and a 183% increase from the 54,064 job cuts announced one month prior.
Andy Challenger provided color on the latest slowdown in the labor market by stating, “some industries are correcting after the hiring boom of the pandemic, but this comes as AI adoption, softening consumer and corporate spending, and rising costs drive belt-tightening and hiring freezes. Those laid off now are finding it harder to quickly secure new roles, which could further loosen the labor market.” Through October, employers have announced 1,099,500 job cuts, an increase of 65% from the 664,839 announced in the first ten months of last year. Additionally, year-to-date layoffs have already surpassed all of the 2024 job cuts by 44%. Government, technology, warehousing, retail, and services are the top five industries experiencing the most layoffs.
With respect to why companies have increased the number of layoffs, the report points to cost-cutting as the top reason cited by employers, responsible for 50,437 announced layoffs. Artificial Intelligence (AI) was the second-most cited factor, leading to 31,039 job cuts as companies continue to restructure and automate. AI has been cited for 48,414 job cuts this year.
As for where the job cuts are occurring recently, we see a surge in the state of Georgia and Washington, aligning to the recent announcement of layoffs from Amazon. In totality for all of 2025, D.C., California, and New York have led the pack. For now, none of these announcements have been reflected in the latest state level unemployment claims, which continue to be a job market gauge worth monitoring while the government remains shutdown and official national employment data delayed.
Adding to concerns over the strength of the current job market is confirmation that hiring plans remain depressed. The seasonal holiday hiring bump is extremely tepid this year. October saw a slight rebound after an abysmal September, but nowhere near enough to bring levels close to the hiring pace set in 2023 or 2024, which were also low by historical standards. Challenger commented, “it's possible with rate cuts and a strong showing in November, companies may make a late season push for employees, but at this point, we do not expect a strong seasonal hiring environment in 2025.”
In summary, any read through of these early warning signs showing up in the national employment figures should lead to increased expectations for the Fed to cut in December.
The Aging Homebuyer Trend in Full Force
This year has been a challenging one for homebuyers and in particular first-time homebuyers. If you need any confirmation of that, just look at these recent trends published by the National Association of Realtors. Their latest “Home Buyers and Sellers” report, released this week, revealed that the median age of first-time buyers rose to a record high of 40 years old, with the median repeat buyer hitting 62, and all buyers increasing to 59. Additionally, the share of first-time homebuyers in 2025 shrank to a historic low of just 21% of all buyers. Prior to 2008, the share of first-time buyers had a historic norm of 40%.
Furthermore, the report notes, “highlighting the rupture in the housing market is the changing landscape [in favor] for a repeat home buyer. Repeat buyers can enter the housing market with large down payments (median of 23%). Thirty percent paid cash and did not finance their home. Repeat buyers have continued to earn housing equity as home prices increase. Home sellers have owned their home for an all-time high of 11 years before selling and making a housing trade.” This development underscores the advantage that repeat homebuyers have over a first-time homebuyer. When it comes to the who, 61% of all home buyers are married couples, 21% are single women, 9% are single men, 6% are unmarried, and 3% fall into the “other” category.
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