HousingWireHousingWire
Mortgage rates rose in the past week, but even as they remain close to 7%, there’s little evidence to suggest they’ll move much higher and further constraint housing affordability.
On Tuesday, 30-year conforming rates averaged 6.93% while 15-year conforming rates averaged 6.76%, according to HousingWire’s Mortgage Rates Center. In comparison, these figures stood at 6.88% and 6.63%, respectively, one week ago.
The odds remain low that the Federal Reserve will step in with policy rate relief in the near term. The CME Group’s FedWatch tool on Tuesday showed that 95% of interest rate traders believe that rates will stay at a range of 4.25% to 4.5% after the Fed’s June 18 meeting.
Looking farther out, however, the chances of a rate cut are higher. Nearly 30% of traders expect a cut at the end of July, while roughly 70% say there will be one by mid-September.
MBA’s thoughts
Bob Broeksmit, the president and CEO of the Mortgage Bankers Association (MBA), delivered prepared remarks on Tuesday at the trade group’s Secondary and Capital Markets Conference in New York City. While Broeksmit didn’t speak directly to mortgage rates, he touched on regulatory reforms under the Trump administration that are expected to rein in consumer housing costs.
“Look no further than FHA and Ginnie Mae, where important leadership positions have been filled by familiar faces who have deep policy experience and industry knowledge, including at MBA,” Broeksmit said. “And while the next commissioner of FHA hasn’t been announced, we expect that he will be a fellow industry practitioner.
“This is a welcome change. We’re now dealing with leaders who know the importance of prudence. We have fewer worries of overregulation and policy proposals that hurt the industry and ultimately increase borrower costs.”
In its latest mortgage originations forecast released Monday, the MBA also recognized the toll that higher interest rates, tariffs and consumer pessimism are having on prospective borrowers.
The MBA reduced its estimate for total origination volume in 2025 to $1.397 trillion, down from $1.406 trillion in March. But it added another $9 billion to its refinance forecast and expects that segment to finish 2025 at $672 billion.
“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.
Housing market metrics
Despite persistently high mortgage rates and home prices, there’s good news for prospective homebuyers in the form of more inventory.
According to Altos, the 768,000 single-family homes for sale today exceeds pre-pandemic levels and is up 33% year over year. New listings, including immediate sales, totaled 90,000 this week, which is 8% above year-ago levels.
While expressing optimism about the state of the market, Altos President Mike Simonsen also cautioned that the numbers should be taken in context.
“This mid-May period is when we typically see the most sellers hit the market,” Simonsen wrote Monday. “This is it — we’re roughly at peak housing market for 2025 right now. So if you’re expecting some kind of oncoming flood of sellers that will tank home prices, it looks like you’ll have to wait another year.”
Altos data also shows that national home prices are virtually unchanged from one year ago, with nine states experiencing flat prices or declines. These include the previous Sun Belt hotspots of Texas, Florida and Georgia, which combine to represent 35% of U.S. housing inventory.
Data released Tuesday by First American shows a similar trend. The company reported that national home prices rose 2% during the year ending in April, the slowest rate of appreciation since 2012.
“Persistently high mortgage rates have tempered demand, while increased inventory has boosted supply, dragging house price appreciation down,” First American Chief Economist Mark Fleming said in a statement.
“This normalization follows the unsustainable price growth seen during the pandemic. Although affordability remains a challenge, slower price appreciation is encouraging for potential home buyers as it lets their income-growth driven house purchasing power increase.”
First American also reported that some major markets, particularly those in the Northeast and Midwest, are seeing rapid price growth in the starter-home segment that is typically most attractive to first-time homebuyers. These cities include Pittsburgh, Baltimore and St. Louis, where homes priced in the lowest tier saw appreciation rates that were double or triple the national average for the year ending in April.
