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The Federal Reserve decided to leave its target interest rate unchanged after its meeting this week, a move likely to keep mortgage rates from falling much this summer. The federal funds rate, the rate that banks charge each other for overnight lending, was kept in the range of 4.25%-4.5% where it has remained for the past six months. While mortgage rates track Treasury yields, not the federal funds rate, broader economic concerns like tariffs and inflation influence both rates.

Amidst continued economic uncertainty, homebuilders are feeling less confident than they have in almost 3 years. The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) fell 2 points in June from May to a reading of 32. In June 2024, the index was 43. Anything below 50 is considered negative. The reading has not been this low since December 2022 when mortgage rates had just jumped up from record lows. Analysts had expected the index to get a bump in June after some tariff negotiations and pullbacks, but high mortgage rates and home prices appear to be holding many buyers back from the market. 

Real estate investors shed their rental properties in record numbers last year, in response to softening rent prices. Almost 11% of all 2024 U.S. home sales came from real estate investors, the highest share in data tracked since 2001, according to a Realtor.com Investor Report.  The median sale price for these investor properties was $330,000 and investor sales increased 5.2% from the year, with investor sales increasing faster than investor buying.

While mortgage interest rates barely moved last week, the number of applications for home loans rose to the highest level in over a month, according to the Mortgage Bankers Association. Total mortgage application volume rose 12.5% during the week ended June11, 2025. Applications for a home purchase mortgage rose 10% for the week and 20% from last year. Refinance demand jumped 16% for the week and 28% on an annual basis. Homebuyers may be taking advantage of increased inventory (31% higher than last year) and easing prices, according to MBA analysts.

Home prices fell in the top 20 U.S. city markets in March for the first time in over two years. According to the S&P Case Shiller Home Price Index, the seasonally adjusted home price fell 0.1% from February while rising 4.1% from the year before. Price appreciation varied wildly among top cities, with New York seeing an 8% year-over-year increase, with Dallas almost unchanged with a 0.2% growth, and Tampa prices falling 2.2% annually.

As the market continue hang in uncertainty over the current economic state, long-term mortgage rates rose to their highest level in three months. The average rate on a 30-year fixed-rate home loan increased to 6.89% during the week ended May 29, 2025, up from 6.86% and the highest rate since February, according to Freddie Mac. However, rates are down from last year at this time when they average 7.03%.

The number of applications for home purchase loans grew 2% during the week ended May 28, 2025 from the week before, according to the Mortgage Bankers Association, and increased 18% from last year. Meanwhile, the average rate on a 30-year fixed-rate mortgage climbed to its highest level since January, increasing to 6.98% from 6.92% the week before. Even though homebuyers still braved the higher mortgage rates, demand for refinance loans fell 7% during the week.

Long-term mortgage rates rose above 7% Monday, after Moody’s downgraded the U.S. credit rating. According to Mortgage News Daily, the average rate on a 30-year fixed rate mortgage jumped to 7.04%, the highest level since April 11. Moody’s pushed the nation’s credit rating down to Aa1 from the top Aaa, due to the increasing burden of the federal government’s budget deficit. A lower rating can put pressure on consumer borrowing costs of all kinds.

While the U.S. housing supply shortage has started to ease, the price of the newly-added homes is not hitting the right notes for most potential buyers. A new study by the National Association of Realtors and Reator.com found that 40% of the nation’s top 100 housing markets are lacking enough affordable inventory for local buyers. For example, while strongest demand for housing is among buyers in the lower and middle price tiers, those with incomes of $50,000 could only afford 8.7% of the available listings in March, compared with 9.4% a year ago, and 27.8% in March 2019.

U.S. homeowners, particularly Boomers, are staying in their homes longer these days, and that is sending ripple effects through the entire housing market. According to Redfin, in 2024, the median time that homeowners lived in and owned their primary residence was 11.8 years, almost double the 6.5 years from 20 years ago. While the median own-time has come down from a high of 13.4 years in 2020, these high numbers mean there are fewer move-up properties and entry-level homes available for interested buyers.

During its two-day meeting ended May 7, 2025, the Federal Reserve decided to leave its target interest rate in the range of 4.25% - 4.5%. Even though the national inflation rate (2.4%) is close to the Fed’s ideal (2%), the economic uncertainty created by the Trump Administration tariffs made the Fed hesitant to add any more change to the mix. Meanwhile, the average rate on a 30-year fixed-rate mortgage was also unchanged this week, floating at 6.76% for the second straight week, according to Freddie Mac.

The median U.S. monthly housing payment reached an all-time high at the end of April, climbing to $2,870, according to Redfin. Rising prices and higher mortgage rates are pushing payments up, resulting in fewer buyers pulling the trigger on contracts, with mortgage-purchase applications falling 6% month-over-month. New listings have increased annually by 6.1% however, and added inventory could release some of the market price pressure in coming months.

The number of applications for U.S. home loans declined this week, even though mortgage interest rates fell for the second week, according to the Mortgage Bankers Association. Both home purchase loan applications and refinance requests decreased 4% during the week ended April 30, 2025, while the average rate on a 30-year fixed-rate mortgage sank to 6.89% from 6.90%. The MBA blames buyer hesitancy on uncertainty about the broader economy.

The difference between what home sellers are asking and what buyers are actually paying has increased to an almost 5-year high, according to Redfin. In March, the median national asking price was $469,729, or 9% higher than the actual median sale price of $431,057. Redfin says the divergence is a result of housing market dynamics shifting toward buyers thanks to increased inventory, but sellers being slow to adjust.

Available U.S. homes for sale reached 1.15 million units in March, a 19% increase over last year, and the highest level since 2020. March inventory rates were just 24% below pre-pandemic averages for that month, a marked improvement from the last two years in March. However, even with lower mortgage interest rates and more property choices, sales were essentially flat year-over-year with only 265,000 pending sales during March, 110,000 fewer than were added to the market.