Hi Friends!

The first week of April 2025 is shaping up to be the most eventful and unpredictable yet. With a packed calendar of economic data releases, employment updates, and political developments, all eyes are on how these events will ripple through the mortgage market. For buyers, sellers, and homeowners alike, staying informed could make all the difference.

Key Economic Events to Watch This Week

Tuesday: ISM Manufacturing PMI
The ISM Manufacturing Purchasing Managers Index (PMI) is a major signal of the health of the U.S. manufacturing sector. February’s reading dipped to 50.3 from 50.9, still indicating slight growth. April’s data will show whether the sector is holding up or softening, which can directly affect mortgage rates by influencing inflation expectations and overall economic momentum.

Tuesday: JOLTS Job Openings Report
January saw a jump in job openings to 7.7 million, showing continued labor market strength. However, if job openings decline, it could suggest cooling in the economy and strengthen the case for the Federal Reserve to cut interest rates sooner. A weaker labor market typically leads to lower mortgage rates.

Wednesday: President Trump’s "Liberation Day" Tariffs
President Trump will unveil a sweeping new tariff plan aimed at penalizing countries that impose duties on U.S. exports. Targeted sectors include automotive, pharmaceuticals, and semiconductors, and countries in the crosshairs include Canada, Mexico, and Venezuela. These tariffs have the potential to raise costs on goods, fuel inflation, and delay interest rate cuts. The economic uncertainty stemming from trade disruptions could further impact mortgage rate volatility.

Thursday: ADP Nonfarm Employment Report
February's report showed only 77,000 new private-sector jobs—a sharp slowdown blamed on business caution. The ADP report is a leading indicator for the official employment data and can shift market expectations around rate policy. Lower-than-expected job growth can push mortgage rates downward.

Friday: March Jobs Report
February’s official report saw 151,000 new jobs and a slight uptick in unemployment to 4.1%. This Friday’s report will be crucial for understanding how resilient the job market really is. Strong numbers could keep the Fed cautious on rate cuts; weak numbers could do the opposite.

Friday: Fed Chair Powell Speaks
While expectations are low for major announcements, Chair Powell’s tone and language will be dissected for clues. At the last Fed meeting, Powell indicated it was too early to assess the impact of trade tensions. Still, any hints of policy shifts can impact mortgage pricing immediately.

Market Context: What’s Going On with Housing?

Despite rising mortgage rates (hovering around 6.7%), housing demand remains solid due to low inventory. The S&P/Case-Shiller Index reported a 4.7% year-over-year increase in prices in March. However, buyers are still cautious, and high borrowing costs are keeping some sellers from listing.

The broader economy grew by 2.5% in 2024, and unemployment remains below 4%, but inflation is still high at 6.5%. Recession fears have grown, now at 35% compared to just 15% last year. Economists warn that new tariffs could add $7,500 to $10,000 to new home construction costs, putting even more pressure on affordability.

The Federal Reserve has kept interest rates steady between 4.25% and 4.5%, but tariff-driven inflation could delay any anticipated cuts. This means mortgage rates may remain elevated in the short term.

A Closer Look: Is Your Home Really an Investment?

There’s a growing conversation around whether your primary residence should be viewed as an investment. Technically, it doesn’t generate income and comes with ongoing expenses, but for most Americans, it remains the largest part of their net worth.

Historically, U.S. home values rise about 3.4% annually before inflation and just 0.5% after. That means most of the time, your home keeps pace with inflation but doesn’t dramatically outpace it.

Exceptions to this norm include the early 2000s housing bubble and the post-2012 boom. Between 2012 and 2021, home prices more than doubled, and today, prices are up 118% even after adjusting for inflation. But that growth hasn’t come with increased affordability. The income needed to buy the median-priced home has risen to $124,000, far above the national median of $79,000.

In 2024, housing became even less affordable, with mortgage payments consuming nearly 47% of the average household’s income. While real estate continues to be a store of value, future appreciation is likely to slow.

Long-Term Perspective: What Comes Next?

Home prices are influenced by many short-term factors, including inflation, interest rates, government policy, and consumer sentiment. But looking at long-term trends, the U.S. market has averaged about 17% growth every five years. In contrast, prices have surged 53% in the past five years alone.

Historically, home prices eventually return to their trend line. While modest gains are likely going forward, buyers and sellers should temper expectations and plan for slower appreciation in line with inflation.

Remember: real estate ownership also comes with costs like taxes, insurance, and maintenance. So even if home values rise, it doesn’t mean your investment is outperforming.

Tariffs, Trade, and Housing: What's at Stake?

Trump’s new trade plan includes a 25% tariff on oil and gas imports from Venezuela and on foreign-made vehicles and car parts. These measures are intended to encourage domestic production and create economic leverage but could also trigger retaliation from trading partners.

With more than $1.4 trillion in imports potentially affected, consumer prices could rise significantly. That would keep inflation elevated, delay Fed rate cuts, and sustain high mortgage rates.

Recession History & Housing Impact

Here’s how past U.S. recessions have affected housing:

• Early 1990s: Prices flat to slightly down.

• Dot-Com Recession (2001): Prices rose.

• Great Recession (2007–2009): Prices fell dramatically.

• COVID-19 Recession (2020): Prices rose due to supply shortages and low rates.

In general, recessions don’t always cause home prices to fall, but they do change the trajectory of the market.

Home Price Growth (2018–2024)

• 2018–2019: 3-5% annual growth

• 2020–2021: 10-15% growth during pandemic boom

• 2021–2022: 15-20% growth

• 2022–2024: 3-5% growth as rates rise

Overall, prices rose 40-50% nationwide during this six-year span. In fact, the total value of U.S. real estate reached $49.6 trillion in mid-2024, a $3.1 trillion increase from the prior year.

Final Thoughts: Should You Buy Now?

Timing the market is notoriously difficult. The best time to buy is when it makes financial and personal sense for you. With so many moving parts—rates, policy, inflation, and supply—there is no perfect moment.

Use logic. Build a plan. And remember: your home is more than an investment. It’s your space to grow, rest, and thrive.