We’ve hit the halfway point of the first quarter of 2025, and the year’s outlook is slightly different than at year’s end. At the end of 2024, economists expected the fed to make up to four rate cuts this year and the MBA forecasted $2.1-2.3B in originations. Things were looking pretty good, and the mantra “survive until 2025” was heard and celebrated around the industry.
Some of that excitement, however, may be waning. The fed didn’t cut rates in January and in the Feb 10 semiannual report to Congress, said they’re not in any hurry to change that stance, leading many to question if the next rate cut won’t be until the Fall.
American Consumer Reactions
American consumers and businesses are on edge with respect to commentary and actions coming out of the White House. Deportations and tariffs could affect costs and profits for builders, farmers, manufacturers and more. Rising costs for businesses are typically passed on to the consumer. Static mortgage rates, locked-in home owners, and a continued housing shortage continue to make the American Dream out of reach for many.
However, the country’s economy continues to grow and unemployment hit a low of 4% in January. These are great numbers and show that overall, we’re doing well. Michael Rehaut, head of U.S. Homebuilding and Building Products Research at J.P. Morgan stated, “New homes for sale are at 481K, the highest level since 2007, and speculative homes for sale are at 385K, the highest since 2008. These metrics are roughly 50%/40% respectively above long-term averages.” Nationally, single-family existing homes for sale are up roughly 20% year-over-year. But, the number remains near record lows, around 20-30% below prior troughs.
Mortgage has always been a boom-and-bust industry. My new mantra: Stay alive in 2025 and we’ll have our kicks in 2026!
