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Aggressive tariffs, mortgage rates near 7% and declining consumer sentiment could all have a major impact on the housing market. The Mortgage Bankers Association (MBA) has adjusted its outlook in response.
The trade group downwardly revised its expectations for existing-home sales and mortgage origination volume for the rest of the year. MBA now forecasts existing-home sales to finish 2025 at 4.266 million. It also calls for total origination volume of $1.397 trillion and refinance volume of $672 million.
MBA’s existing-home sales forecast is down from 4.341 million in March, while origination estimates are down from $1.406 trillion. But the May forecast for refinance volume is up from $663 million in March.
While U.S. macroeconomic uncertainty reasonably warrants a reassessment of the outlook, the revisions are down only slightly, suggesting that MBA is optimistic about navigating the headwinds.
“Nobody’s feeling exuberant about the housing market or the mortgage market right now, but it’s a little better than these last couple of years, which have been truly very difficult for a lot of our members,” MBA chief economist Mike Fratantoni said Monday at the trade group’s Secondary & Capital Markets Conference.
The MBA also revised its outlook on mortgage rates. The trade group now expects rates in the fourth quarter of 2025 to be 6.6%, 10 basis points higher than in March. It expects rates of 6.5% in the first two quarters of 2026.
Fratantoni also said the MBA is dropping its 2025 growth forecast for gross domestic product (GDP) to just 0.3% as a result trade policies and downstream issues resulting from them.
Economic uncertainty has clouded the outlook for much of the real estate and mortgage industries. Shifting trade policy in April pushed stock markets down and mortgage rates up. Consumer sentiment has plunged too as the University of Michigan’s index is near all-time lows.
The downgrade to the existing-home sales forecast reflects the direction that actual sales are taking so far in 2025. According to the March report from the National Association of Realtors (NAR), existing sales were at a seasonally adjusted annual rate of 4.02 million, below the level that most 2025 forecasts called for before the year started.
HousingWire’s 2025 housing market forecast projected 4.2 million existing-home sales for the year. That’s at the bottom of the range among the forecasts that HousingWire analyzed, with NAR’s being the highest at 4.9 million.
Fratantoni struck a generally optimistic tone during his appearance at the conference. With regard to tariffs, he gave a glass-is-half-full perspective.
Had the tariffs that President Donald Trump announced on April 2 not been paused, Fratantoni said the effective tariff rate on all imports would have jumped from about 2.5% to 25%. But with the pause — and the temporary rollback for Chinese goods — that number is now closer to 10% to 15%.
“The good news is tariff rates aren’t going up tenfold,” he said. “The unfortunate news from our perspective is they’re probably going to go up at least fourfold, and maybe more than that.”
