WEEKLY MARKET UPDATE
Helping you navigate the market
Week Ending May 23, 2025
Deficits, Tariffs & Housing Trends: What to Know This Week
Even without any major economic reports, mortgage markets saw significant movement this week as investors reacted to news out of Washington and beyond. The primary drivers? Government spending debates, shifting deficit projections, and a surprise tariff announcement.
Mortgage Market Movement
Markets were jittery as discussions around a proposed government spending bill took center stage. Investors are particularly concerned about potential tax cuts that could increase the federal deficit by trillions—an outcome that may spur faster economic growth and inflation. This, in turn, typically pushes mortgage rates higher.
Adding to the week’s volatility, President Trump reignited tariff concerns on Friday by recommending a 50% tariff on imports from the European Union starting June 1, citing stalled trade negotiations. Mortgage rates responded to all this back-and-forth by inching up slightly by week’s end.
Housing Market Snapshot
Existing Home Sales
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April’s sales dropped slightly compared to March, marking the slowest April pace since 2009.
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Median price: $414,000 (up 2% year-over-year) — a record high for April.
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Inventory: 4.4-month supply (still below a balanced 6-month supply), but 20% higher than a year ago.
New Home Sales
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A bright spot: sales jumped 11% in April from March and were 3% above last year.
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Median price: $407,200 (down 2% year-over-year).
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Inventory levels remain elevated—near highs not seen since 2007.
Homebuilding Activity
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Housing starts: Up 2% overall, but single-family starts dropped 2%—the lowest since July 2024.
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Building permits for single-family homes fell 5%, signaling a possible slowdown in new supply.
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Builder confidence, measured by the NAHB, hit an 18-month low as developers grapple with pricing challenges driven by tariff uncertainty and rising costs.
Bottom Line
Mortgage markets continue to react swiftly to economic and political headlines. For buyers and sellers alike, staying informed is key. While inventory is showing early signs of improvement, affordability and financing remain sensitive to market shifts.
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