What This Short Holiday Week Means for Mortgage Rates and Buyers
We may be heading into a shortened week with markets closed on Friday for the Fourth of July, but don’t let that fool you! This week could pack a serious punch when it comes to mortgage rate direction.
With several high-impact economic events and data releases scheduled, real estate professionals and buyers alike should be paying close attention. Here’s what to know, and how it could affect your next move in the market.
Key Events to Watch This Week
Tuesday: Fed Chair Jerome Powell Speaks
Any shift in Powell’s tone could be meaningful. If he acknowledges softening inflation or a cooling labor market, it could be a sign that the Fed is preparing to cut interest rates. This would likely push Treasury yields down, which in turn helps bring mortgage rates lower.
Tuesday: ISM Manufacturing Index (June)
This report offers insight into how the manufacturing sector is performing. If we see weaker numbers than expected, it could indicate slowing business activity; something that typically pushes bond yields and mortgage rates lower.
Tuesday: JOLTS Job Openings Report (May)
This measure of job vacancies helps the Fed understand labor market strength. A drop in job openings signals reduced wage pressure and a cooler economy. In terms of mortgage rates, signs of labor market weakness often result in bond market rallies and lower borrowing costs.
Wednesday: ADP Employment Report (June)
While this private sector report doesn’t always align with the official jobs report, it offers an early glimpse at hiring trends. If job growth slows, markets may price in a higher likelihood of rate cuts, further easing mortgage rates.
Thursday: Nonfarm Payrolls Report (June)
This is the most important data release of the week. If job creation slows or unemployment ticks higher, expectations for Fed rate cuts will increase. Lower bond yields typically follow, creating a more favorable environment for mortgage borrowers.
Friday: Markets Closed for Independence Day
With the holiday, expect market activity to slow down as early as Thursday afternoon. Light trading volume can increase volatility—meaning Thursday’s data could move rates more than usual.
A Surprising Player in Mortgage Rate Trends: Stablecoins
Beyond traditional economic indicators, an unexpected force is beginning to influence the bond market: stablecoins. These digital currencies, designed to maintain a 1:1 value with the U.S. dollar, are now major buyers of U.S. Treasuries.
Here’s why this matters:
The current stablecoin market is valued at roughly $240 billion, and it’s projected to reach $2 trillion in the coming years.
That growth could mean as much as $1.6 trillion in new demand for U.S. Treasury securities.
Higher demand for Treasuries leads to rising bond prices and falling yields which directly impacts mortgage rates.
If the Treasury increases issuance of short-term debt, as currently proposed, the demand from stable coins could help absorb the supply, keeping pressure off longer-term rates like the 10-year Treasury, which heavily influences mortgage pricing.
The Market Is Already Pricing in Future Rate Cuts
According to the bond market:
Three rate cuts are expected in 2025
Two more are anticipated in 2026
This would lower the Fed Funds Rate from the current 5.25–5.50% range down to 3.00%
If this plays out, we could finally see a sustained decline in mortgage rates, a welcome change for buyers and sellers looking for relief.
Is a New Fed Chair Coming?
Speculation is swirling that former President Trump may name a replacement for Federal Reserve Chair Jerome Powell before Powell’s term ends in May 2026.
While this would be an unusual move, the implications are significant:
Names being discussed include officials known to favor rate cuts; something markets typically welcome.
Even the possibility of a leadership change has already caused Treasury yields to dip.
A new Fed Chair with a dovish (rate-cut-friendly) stance could accelerate a move toward lower borrowing costs.
While this raises some concerns about the Fed’s independence, the immediate takeaway for buyers and agents is simple: A shift in leadership could bring lower rates, faster.
Lower Rates vs. Lower Prices: Which Is Better?
Lower Rates:
A 1% drop in rates (from 6.875% to 5.875%) can reduce monthly mortgage payments by $320–$440 on a $500,000–$700,000 loan.
A further drop to 4.875% would save an additional $280–$330 per month.
Lower rates can also unlock inventory by encouraging homeowners with ultra-low mortgages to finally make a move.
Caveat:
Lower rates tend to boost demand. If inventory doesn't rise to meet it, we could see home prices spike again—canceling out the benefits of cheaper financing.
Lower Prices:
A $50,000 drop in home price reduces the loan amount by about $48,500 (assuming 97% financing).
That equates to a $320–$350 monthly savings—without needing a rate change.
A lower purchase price also means a smaller down payment and a better loan-to-value ratio for future refinancing or resale.
Caveat:
Prices usually decline only when supply greatly exceeds demand, a process that can be slow, and potentially painful for current homeowners and local economies.
Housing Market Snapshot
According to Redfin's latest data, here’s where things stand nationally and across key Bay Area metros:
National Trends
New listings are up just 2.5% year-over-year—the smallest increase in five months.
Pending sales are down 2.3%, the sharpest drop in three months.
Home prices reached a new all-time high, up 1.6% year-over-year.
Mortgage rates are hovering around 6.8%.
Inventory is up 14.3%, but supply growth is slowing.
Median days on market: 36 (up five days YoY).
Only 28.6% of homes are selling above list price.
Sale-to-list price ratio: 99.1%.
Daily mortgage applications are up roughly 12%, indicating early signs of buyer re-engagement.
Bay Area Market Highlights (May 2025)
San Jose
Median Sale Price: $1,500,000 (down 0.5% YoY)
Homes Sold: 488 (down 27%)
Median Days on Market: 14
Buyer Competition: Moderate, with ~5 offers per home
San Francisco
Median Sale Price: $1,549,000 (up 9.9% YoY)
Homes Sold: 503 (down 4.2%)
Median Days on Market: 19
Buyer Competition: Strong, with frequent bidding wars and homes selling ~7% over asking
Sacramento
Median Sale Price: $511,500 (essentially flat YoY)
Homes Sold: 384 (up 1.3%)
Median Days on Market: 17
Buyer Competition: Moderate, averaging 3 offers per listing
What Buyers and Realtors Should Know Right Now
Sellers remain firm on pricing, but demand is showing signs of cooling. Homes are sitting a little longer, and buyers may find more room to negotiate, especially in markets like San Jose and Sacramento where supply is starting to outpace demand.
High rates are still a challenge, but opportunities for motivated buyers are beginning to emerge.
If you're ready to make a move, now may be your window. Watch for price reductions. Be proactive. And remember: the worst a seller can say is no :)