For the week of MARCH 31, 2025

“I want a pit crew…. I hate the procedure I currently have to go through when I have car problems.”—Dave Barry, American author and humor columnist

New Home Sales gained in February, and are up 5.1% from a year ago. The median sales price is now down 10% from its 2022 peak. Inventories rose, with the supply of completed homes up over 280% from their 2022 bottom.

The Pending Home Sales measure of contract signings on existing homes also advanced in February. This year, the National Association of Realtors expects those sales will increase 6%, and new home sales by 10%.

Home prices rose modestly in January, the Case-Shiller index up 0.6%, and the FHFA up just 0.2%. Annual home price increases keep cooling, well below last year’s February peak, as inventory grows.

TARIFFIC TRIP... Stocks took traders on a wild ride, as tariff concerns rose, abated, then rose again. Worries over inflation and consumer sentiment also sent the three major market indexes down for the week. 

The whole tariff story is still to be told, yet consumer confidence has dipped—no doubt from all the negative tariff coverage in the media—while the Fed’s favorite PCE Prices inflation measure increased a trifle more than expected.

Yet inflation is staying under 3%, and consumers were confident enough to up their spending both in February and compared to last year. Plus, businesses keep investing, as Durable Goods Orders increased for another month.

The week ended with the Dow down 1.0%, to 41,584; the S&P 500 down 1.5%, to 5,581; and the Nasdaq down 2.6%, to 17,323.

Overall, bond prices didn't move much on the week, the 30-Year UMBS 5.5% edging down 0.14, to 99.15. The national average 30-year fixed mortgage rate ticked down in Freddie Mac's Primary Mortgage Market Survey. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.    

DID YOU KNOW… First American’s data pegs annual home price appreciation at 2.1%. If that holds, along with current inventory, they say “affordability will improve by nearly 3.5% by the end of 2025.”

CONSTRUCTION SPENDING, MORTGAGE APPLICATIONS, JOBS… We'll check to see if the residential piece of Construction Spending stays on its upward trajectory. Likewise, the purchase part of the MBA Mortgage Applications Index, which has been trending upward. Economists expect the labor market to remain healthy, the March jobs report showing continued growth in Nonfarm Payrolls and Average Hourly Earnings, and the Unemployment Rate a low 4.1%. 

Forecasting Federal Reserve policy changes in coming months. The futures market now sees a rate cut from the Fed in June, then another move down in July. Note: In the lower chart, the 21.2% probability of change is a 78.8% probability the rate will stay the same. Current rate is 4.25%-4.50%.

Probability of change from current policy:

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