Article Summary
Despite significant economic and political volatility—including calls for Fed rate cuts, GSE policy shifts, and new tariffs—mortgage rates remained stable in May 2025. The 10-year yield hovered around 4.40%, with mortgage spreads improving from 2023 peaks. Housing demand showed resilience, with purchase applications up 18% YoY and pending sales steady despite elevated rates. Inventory growth and price-cut percentages signaled a cooling market, aligning with forecasts of modest 1.77% home price gains in 2025.
What This Means for You
- Buyers: Lock in rates now if spreads normalize, as rates could drop 0.63–0.83%.
- Sellers: Expect price adjustments; 1 in 3 homes now see reductions as inventory nears 2019 levels.
- Investors: Monitor 10-year yield fluctuations—rates between 5.75% and 7.25% are projected for 2025.
- Warning: Jobs week and Fed commentary could trigger rate volatility; watch labor data closely.
People Also Ask About
- Will mortgage rates drop in 2025? Rates may decline if spreads return to historical norms (1.60–1.80%).
- How do tariffs impact housing? Steel tariffs could raise construction costs, but current data shows minimal rate effects.
- Is inventory improving? Yes—weekly inventory rose to 803,519, nearing pre-pandemic levels.
- Why are purchase applications up? Demand persists despite rates; 17 straight weeks of YoY growth.
Expert Opinion
“The market’s indifference to political noise underscores its focus on fundamentals: labor data and inflation. While 2025’s 1.77% price forecast reflects caution, inventory recovery could finally balance supply-demand dynamics by late 2025,” notes Logan Mohtashami, HousingWire analyst.
Key Terms
- 10-year yield and mortgage rate correlation
- GSE implicit guarantee impact on housing
- 2025 mortgage rate forecast 5.75-7.25%
- Housing inventory recovery trends
- Mortgage spread normalization
- Price-cut percentage market indicator
- Fed rate cut implications for real estate
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