For the week of MAY 5, 2025

“You can learn many things from children. How much patience you have, for instance.”—Franklin P. Jones, American writer and humorist 

Pending Homes Sales spiked 6.1% in March, posting the biggest monthly gain since 2023. The National Association of Realtors said this rise in signed contracts on existing homes “implies a sizable build-up of potential home buyers.”

Realtor.com reports that the supply of homes for sale hit a post-pandemic high in April—rising 30.6% in the last year. That surpassed April 2020 levels, while inventory grew for the 18th month in a row.

Both the Case-Shiller and FHFA home price indexes posted 3.9% annual gains in February. But the pace of home price growth is starting to slow, moderating from the rapid increases seen in previous years.

TARIFFIC RECOVERY... Stocks recovered all they'd lost since April 2, as the S&P 500 finished ahead of where it was before tariffs were announced. Positive data quelled fears around inflation, consumer spending, and the labor market.

Consumer spending jumped in March—a month when PCE Prices were unchanged, since inflation didn't move up at all. Initial Q1 GDP contracted slightly, but that was from the rise in imports with businesses front-running tariffs.

The big kicker came when Friday's April jobs report delivered a better-than-expected 177,000 new Nonfarm Payrolls, 3.8% annual growth in hourly earnings, and no gain in the unemployment rate, as the labor force rose by 518,000.

The week ended with the Dow UP 3.0%, to 41,317; the S&P 500 UP 2.9%, to 5,687; and the Nasdaq UP 3.4%, to 17,978.

As money flowed to equities, bond prices slipped overall, though the 30-Year UMBS 5.5% edged UP 0.08, to 99.15. The national average 30-year fixed mortgage rate declined again last week 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… Spending on residential construction overall cooled a bit in March, but still came in 2.8% ahead of last year. Best of all, spending on single-family builds moved up from February.

MORTGAGE APPLICATIONS, SERVICES, JOBLESS CLAIMS, THE FED… Fed week includes a check on the weekly MBA Mortgage Applications Index to monitor the spring housing market. Economists expect the April ISM Services report will show that dominant sector is still expanding. Initial Jobless Claims are forecast to stay far below recession levels. And the consensus is that the FOMC Rate Decision will be for the Fed to keep the rate right where it is.

Forecasting Federal Reserve policy changes in coming months. The Fed wants to see a weakening labor market before it cuts rates, so Friday’s unexpectedly positive  April jobs numbers saw Wall Street push the probability of the first Fed rate cut to July. Note: In the lower chart, the 3.2% probability of change is a 96.8% probability the rate will stay the same. Current rate is 4.25%-4.50%.

Probability of change from current policy:

Business is a contact sport. Even more important than what you know is who you know. Relationships matter more than anything else, so focus on building and maintaining strong connections with prospects, clients, and referral partners.