Fed Meeting Insights, Mortgage Rates, and the China-US Trade War: What's Next for the Housing Market?

The recent Federal Reserve meeting confirmed expectations—interest rates are holding steady at 4.25% to 4.5%. Federal Reserve Chair Jerome Powell emphasized that future decisions will remain data-driven, citing consistent economic activity, low unemployment, and persistent inflation. The Fed is cautious, seeking to avoid past mistakes of cutting rates either prematurely or too late, as seen in 2019 and 2024.

Mortgage Rate Outlook

Mortgage rates remain elevated, with the latest quotes showing a 30-year fixed rate averaging around 6.92%. Experts believe rates will likely stay within the current range (6.75% - 7.25%) throughout 2025 unless significant economic shifts occur.

Buyers waiting for a major drop in rates might find themselves disappointed. Instead, focusing on affordability, monthly payments, and personal housing needs will prove more practical. Waiting too long could lead to increased competition, driving property prices higher even if rates dip slightly.

China-US Trade War Pause: Implications for Housing

In recent news, the U.S. and China agreed to significantly lower reciprocal tariffs from 125% to 10%, creating a temporary 90-day truce. This development triggered positive market reactions, boosting stocks and investor confidence.

Joel Berner, a housing market expert, suggests that this easing of trade tensions benefits the housing market in several ways:

• Lower construction costs for newly built homes.
  
  
• Reduced inflation pressures.
  
  
• Increased consumer confidence.
  
  

Though this truce is temporary, its continuation could enhance market stability, indirectly supporting steady mortgage rates and a healthy housing market.

Logan Mohtashami’s Economic Scenarios

Housing analyst Logan Mohtashami identifies three scenarios for mortgage rates influenced by the ongoing trade situation:

1. Avoiding recession with elevated rates: Economic stability without a recession could maintain higher rates.
   
   
2. Improving mortgage spreads: Stability in economic policies could narrow the gap between treasury yields and mortgage rates, potentially stabilizing rates.
   
   
3. Economic downturn leading to aggressive Fed rate cuts: Though least likely, a significant economic weakening could force the Fed into more aggressive rate cuts, potentially bringing mortgage rates closer to 6%.
   
   

Experts see the second scenario—improved mortgage spreads and moderate Fed action—as the most likely outcome for the remainder of 2025.

New Listings Surge

One optimistic signal for buyers is the recent surge in new property listings. For the first time in three years, new weekly listings exceeded 80,000 nationwide. Factors contributing to this surge include sellers adjusting to higher rates, a backlog of sellers re-entering the market, and market normalization.

Buyers should monitor the market closely rather than trying to time it perfectly. More listings mean increased opportunities, though waiting for ideal market conditions might result in missing out on the right home.

Final Thoughts

The Federal Reserve's cautious stance and the pause in the China-US trade war signal stability for the housing market. Mortgage rates, while elevated, are unlikely to shift dramatically in the short term. With increased inventory on the horizon, now might be the right time to act, especially if you're considering a move motivated by personal or family needs rather than strictly economic predictions.

Stay informed and consult with a trusted real estate professional to navigate this dynamic market effectively.

Stay connected for the latest updates, and if you have any questions about how these developments might affect your real estate strategy, reach out anytime—I'm here to help. Schedule your FREE Consultation today by clicking here, or emailing me at rachel@movemetoswco.com

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