Home Prices Are Flatlining, But Not Falling
The latest Case-Shiller Home Price Index showed a 3.9% year-over-year increase for February, but beneath that headline is a more telling trend—national prices have remained essentially flat since June 2024. While that YoY figure still sounds healthy, it’s more a reflection of gains made last spring and early summer than a signal of current momentum. For agents, this means pricing conversations with sellers need to be rooted in recent, local activity—not in broad national headlines.
Economic Growth Pulls Back More Than Expected
Q1 GDP growth came in at -0.3%, well below expectations for a modest gain. This is the first quarterly economic contraction in over a year and could signal that higher borrowing costs and slower consumer spending are starting to weigh on the broader economy. With April jobs data due out this Friday, many are watching closely to see whether the labor market shows similar signs of softening.
Mortgage Rates Back Off April Highs, But Spread Widening Signals Uncertainty
After peaking in mid-April, mortgage rates have ticked down slightly—about 0.125% lower in recent weeks. However, the spread between mortgage rates and the 10-year Treasury has widened, indicating that mortgage-backed securities (MBS) are underperforming. This usually happens when uncertainty grows and investors demand more return for perceived risk. That added spread can blunt some of the benefit from falling Treasury yields, keeping mortgage rates stickier than they should be.
That said, the bigger picture remains stable. For the past 15 months, mortgage rates have trended within a relatively narrow band—between 6.60% and 6.90%—with very few sustained moves outside that range. We’re still in that same territory today, suggesting that while volatility remains, there’s no current breakout in either direction.
The Fed Stays Put (for Now), But Markets Are Betting on Cuts
The Federal Reserve is expected to hold rates steady at its upcoming May meeting, with markets placing a 90% probability on no change. However, futures are still pricing in up to four rate cuts by the end of 2025. Whether that actually plays out depends on how inflation evolves—and, increasingly, on whether growth and employment show more signs of softening. The next few months will be key in shaping both the Fed’s decisions and the tone of the mortgage market heading into summer.
What This Means for Agents
Buyers remain sensitive to rate movements, and sellers are still adjusting to slower price appreciation. Agents should continue preparing clients for a market that’s stable, but not booming—especially when it comes to price negotiations and financing options. As rates drift slightly lower and economic indicators soften, we could see increased motivation from rate-sensitive buyers this summer.