UPDATE 5/29/2025: Rates Dip, Confidence Jumps, and Inventory Surges: Is the Market Finally Balancing Out?

Mortgage rates just slipped below 7%—but is it enough to jolt the market? In this week’s episode of Mortgage, Markets, and More, Peter unpacks a surprising surge in consumer confidence, the highest housing inventory levels in nearly six years, and what these shifts could mean for buyers and sellers alike. 🏠📉

We break down the psychological impact of dipping below the 7% rate threshold, explain why Northeast and Midwest markets are still behaving like outliers, and explore what’s driving a cautious optimism among consumers. Plus, with the Fed holding steady, what’s next for policy and inflation?

🔍 Get the data. Understand the trends. Navigate the market smarter.

#MortgageRates #HousingInventory #ConsumerConfidence #RealEstateMarket #HomeBuyingTips #InterestRates #FedPolicy #Refinance #HousingTrends #SpringMarket2025 #MortgagePodcast

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Peter D'Angelo | NMLS: 885309 | Branch Manager | Guaranteed Rate, Inc., NMLS 2611
Peter.DAngelo@Rate.com

*All information, topics, discussion is my own personal opinion and insight, not reflective of Guaranteed Rate, Inc. May contain market information for informational purposes only, not to be used as financial advice.

Transcript

Podcast_05.29.2025-Update

 [00:00:00] Welcome to Mortgage Markets and more. I'm your host, Peter D'Angelo. I hope you're doing great and enjoying this short week. Some housekeeping items. You're listening to this episode Thursday morning. I am changing the cadence of this episode when it gets released on my podcast platforms, so that when I record it, you have the latest and greatest immediately available to you.

Instead of waiting until Friday morning, we find ourselves in an environment where things do change very quickly. So. I wanna make sure that the information's out there as quickly as possible. And for those listening on radio free, Montclair, you're listening to this on Friday morning. As a consolation, I am actually gonna be providing you later on in your episode with Monday's mortgage update, and I will be doing that moving forward so you get a little sneak peek at what will be available [00:01:00] later on on my podcast channel.

All right. That's enough of the housekeeping. We've got a lot to take a look at today. There's been some tangible shifts in the housing market and there's some changes to consumer confidence, and I also thought, you know, rattling off mortgage interest rates, what the averages are for all those buckets. I don't know how much value that provides, but what I can talk to is the trends and where we're at, and then.

Because things are changing so rapidly by the time you listen to the episode, it could be a very different situation. So at least this is our snapshot in time. What are things looking like right now? So we're gonna start off with the mortgage interest rate market. Currently we see some slight improvement, which is great.

We saw that interest rates were going up. Over a few weeks and ending off last week and starting off this week, we saw some positive shifts. We are now averaging below 7%, so now the national average for the 30 year fixed rate mortgage is averaging 6.89%. That is not a [00:02:00] lot different, but that is helpful. I want to highlight this one thing though.

When we look at these averages, there are ways that you can pay a premium to get a lower interest rate. Those are called discount points. I have an episode discussing that if you'd like to check it out on my YouTube channel. But discount points are a way that you can get an actual lower fixed, 30 year interest rate, but you're paying a premium for that at closing.

When we're looking at these averages, the average interest rate that gets reported is the average rate that's offered. What we're not capturing is if. Clients, borrowers are paying premiums for that. So when we are in this average, where it's close to 7% and then we see interest rates come down a little bit like that, there's a little bit of a margin for for this, for that component.

And the reason why I say that is there is a psychological element to having an interest [00:03:00] rate with a six on it versus a seven and commonly. Borrowers and clients are inclined to have an interest rate that's at least just below seven for that peace of mind of knowing that. So when we're in this area where the average is around 7%, sometimes this little drop below is just an indication that borrowers are paying and getting a little bit of a lower interest rate to keep that rate below 7%.

So I hope that makes sense. Otherwise, the market conditions have improved a bit too. So there's a combination of things happening here, but I thought that would be important to highlight, especially when we're comparing things, when we're looking year over year, and now when we're putting that into context year over year.

This interest rate 6.89% is just about 0.3% lower than the average was last year. That is super helpful. I [00:04:00] think the reading in May of 2024 was 7.28% for an average 30 year fixed rate mortgage. That's savings when we're talking about 30 basis points, which is 0.3%. If we're looking at it compared in the interest rate, a quarter of a percent on the interest rate difference is a significant amount of buying power.

That means you can afford a little bit more with the same payment. Um, so that's something bear in mind, even though that sounds like a small amount that's meaningful, the refinance activity actually surged. Um, over the past couple weeks with a recent trend of, of a hold, uh, pretty much when interest rates were going down.

Once they started coming up, people started going through the process to get refinanced before interest rates went up further again, so anyone who's on the fence likely felt compelled. And then we move on a little bit later. Interest rates started going up, so people are holding off. But comparing that to a year ago, a lot more activity, a lot more [00:05:00] borrowers interested in refinancing because they are like sitting on a lot of home equity.

As far as predictions for interest rates moving forward, everyone, I think the consensus now is staying within the six point a half to 7% range. That's what we're going to see. Uh, analysts at JP Morgan, they don't see interest rates going below six point a half percent this year at all. Um. Now we're going to briefly talk, moving on from mortgage interest rates.

Gonna briefly talk about the housing inventory 'cause I don't wanna spoil. Monday's National Association of Realtor. Uh, existing home sales data update and taking a look at this high level information. Inventory levels are actually the highest that they've been in almost six years. Just definitely over five years now with active home listings reaching over a million homes that.

Is truly the highest point since December of 2019. So there's progress, and that also indicates the 78th week of consecutive inventory growth throughout [00:06:00] the country. So that's a good sign that shows that there's a little bit more of a return to normal, so we're approaching a more balanced and normal market.

When we look at these growth metrics, the active listings increased 30.6% compared to the same time last year in April. Saw. 20.8% growth in existing home inventory. So in on both sides we're, we're moving in the right direction. The new listings that have come out, fresh inventory that rose 9.2% compared to April of 2024.

Again, we're moving into. What we would call a mild sellers market. Matter of fact, that's exactly what National Association of Realtors, chief Economist, Lawrence Yung mentioned. While it's still this mild sellers market, uh, the increased inventory is definitely providing buyers with possibly some more negotiating power.

Looking at the regional side of this, that's where we can kind of put in our context for [00:07:00] here in the Northeast and in New Jersey that is. Not the case 100%. We're seeing some improvement for sure, but it's not moving at the same pace as the rest of the country. If you look at the south and the West, those.

Market areas are actually seeing an influx in inventory, which is creating lower home value appreciation days on market homes are staying listed for longer, and there's a softening occurring there in the northeast and the Midwest. That is not the case. We're seeing that. Inventory is still not quite at the level that the demand is, so as long as that's going to be the case, we're going to see continued outlier activity in the Northeast and the Midwest with higher home value appreciations.

There's a lot more on that on Monday's episode, so definitely tune in and check that one out. I wanna take a moment to talk about consumer confidence, and I don't want to get too far into the weeds with market and you know, too much [00:08:00] industry talk, but essentially there is a survey that gets sent out so that the conference board that provides these reports can let economists, analysts.

Let the public know of where the consumer sentiment is. So in the survey, they will gather people's thoughts and ideas and get their feedback so they can get an idea, and they actually put that down into a number. So they have a, they've figured out this way, kind of like a Likert scale to weigh everything in the questions so that we get a number on a scale of one, which would be terrible, to a hundred, which means.

Oh my goodness. This is utopia. This is the best possible, um, situation for the economy and for, for everything. Uh, and that came in, um, at 98, so that is incredible. So that's up 12.3 points. Um, in May. Now there's an important, the devil's in the details. Data's important, data's very helpful, but if we don't [00:09:00] have the right context for it could sound.

Very different. So lemme put this into context. That was a survey that was conducted in May and that means, you know, there's, that's quite a high level of confidence that the consumer is reporting on. That happened. That survey happened to have occurred right after the China US tariff renegotiation news where there was a temporary pause and things looked like they were gonna be improving.

So. There could have been a, an immediate optimism that's being captured in that report. So that could skew this a little bit. We'll take, we'll take a look at, um, June, when, when that becomes available, but just wanted to make mention of that, uh, the expectation index. This is now people's outlook on short term.

Um, that, that surged also to 72.8, but that's still below. If it were below 80, that's normally a signal of a possible recession ahead. However, thi this has been [00:10:00] living in that area for a, a couple years now. So, uh, that I, we don't know how accurate that will be, but it's showing improvement, so that means that there's a sense of optimism that seems to be evident from these reports.

And the overall economic outlook is that people are now finding themselves in a place of maybe more of a wait and see approach. And that is with respect to everything which affects us for the real estate market. But, um, you know, even for job opportunity or changing jobs or looking for other employment.

All those types of things. Well, people are now holding steady and they're just gonna kind of gauge the situation and see where things go. Um, the last thing that we're gonna talk about is the Federal Reserve. Very briefly, the right now, the next meeting, which is in June, there's expectations that that meeting is very likely going to be the Fed holding interest rates where they are at 4.25 to 4.5%.

And that is because [00:11:00] we need to see. Proper progress toward inflation, which is coming out this week. Matter of fact, by the time you're listening to this, that data could be available. The personal consumption and expenditure is being released today, so that may be available now. That's going to wind up moving the market.

I always like reporting out on that the next week because then we get to see what that, what kind of effect that that had in the market. Uh, we can only speculate so much because there's also other data that comes out. Things like the GDP report, so the. Market's gonna be looking to these things to see if it's going to set the stage for the Federal Reserve to have more of a cause to ease their monetary policy and lower that interest rate.

But right now our expectations could be properly set that we probably aren't going to see any change to monetary policy barring something coming outta left field and that this situation with interest rates is going to be our situation normal like we've been talking about. Ad nauseum throughout this whole year.

So we'll have to see how it develops. I will keep you posted. The best thing we could do [00:12:00] is keep our eye on the information and make sure that we're working within our budget and with what works for us. That is the most important part. The market's going to do what it's going to do. It's more about how we manage ourselves within it.

Uh, some key takeaways. There's a supply and demand rebalancing occurring. Definitely listen on Monday for that episode. Um, rate sensitivity. There's a little bit more of a cautious approach by the consumer right now because of this little bit of volatility that we had, and there's going to be more so that's.

Just good information to have to manage prudently moving forward. Uh, the economic policy with respect to tariffs is still playing a big role, but it's been kind of oh hum this past week, which is good. And I think we all needed that little bit of a break and reprieve. Uh, and then the seasonal timing of this real estate market is a little bit.

Different right now, but it is showing that we are having a rather strong spring market nationally. What that feels like [00:13:00] locally here in New Jersey and the Northeast is a little bit different. We are seeing a little bit more of the same, with a slight softening that's happening and um. We're gonna have to just continue to see how that develops locally for us here, because we are in a very high competition, high demand market.

That's our update for today. I hope you found it helpful and useful. Definitely stay tuned for Monday's update for uh, April existing home sales data. It's a really exciting episode with a lot of great information. If you have any questions, comments, concerns, anything that you would like covered on the show, please feel free to reach out to me.

All of my contact information is below in the episode description. I hope you all have a great rest of your week and take good care.

 [00:14:00]