For the week of JULY 14, 2025

“It’s a strange world of language in which skating on thin ice can get you into hot water.”—Franklin P. Jones, American journalist

The Mortgage Bankers Association (MBA) reported purchase mortgage applications surged 9% on the week, to the highest level of activity in two and a half years, 25% higher than the same week a year ago.

Optimal Blue reported rate lock volume on purchase loans held steady in June. Since the spring home-buying season usually starts to slow down then, this indicates that home sales in June will be stronger than expected.

Realtor.com’s latest housing trends report reveals that despite a gain in delistings, buyers have more options now than at any time since the start of the pandemic—plus, about 20% of listings got price cuts.

FRIDAY REVERSAL... Through Thursday, traders' bullish enthusiasm drove the S&P 500 and the Nasdaq to new record highs. But Friday, the big indexes ended with modest losses driven by inflation concerns over tariff actions.

Late in the week, Brazil got a 50% tariff letter and Canada one for a 35% levy on goods not covered by the USMCA. Yet stocks held up fairly well, as traders realized these letters were basically intended as negotiating leverage.

Plus, initial jobless claims fell again, Small Business Optimism held at its high level, and the June Treasury Budget posted a surprising $27 billion surplus versus the $71 billion deficit a year ago. The reason? Income from tariffs!

The week ended with the Dow down 1.0%, to 44,372; the S&P 500 down 0.3%, to 6,260; and the Nasdaq down 0.1%, to 20,586.

Bonds fell as well, the 30-Year UMBS 5.5% dipping 0.04, to 99.17. Freddie Mac’s weekly survey reported the national average 30-year fixed mortgage rate “moved slightly higher” after falling for five straight weeks. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.    

DID YOU KNOW… Fannie Mae’s Home Purchase Sentiment Index dipped a tad in June, yet 6 in 10 Americans still say it’s a good time to sell, while the share of those saying it’s a good time to buy went up nine percentage points from a year ago. 

HOME BUILDING, RETAIL SALES, INFLATON... June Housing Starts are expected up for the month, while Building Permits are forecast off a trifle, as builders focus on completions to meet buyer demand. Economists predict Retail Sales will rebound in June, showing that consumers keep contributing to the economy, no doubt encouraged by moderating inflation, which should be confirmed by the June Consumer Price Index (CPI) report.

Forecasting Federal Reserve policy changes in coming months. The futures market still sees a rate cut in September, but then a hold in October. Note: In the lower chart, the 6.7% probability of change is a 93.3% probability the rate will stay the same. Current rate is 4.25%-4.50%.

Probability of change from current policy:

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