Market Update - May 2, 2025

Friday, May 2, 2025

This Market Update is written by our Capital Market specialists each week to bring you insight into what's happening in the market and how it may affect mortgage rates and real estate trends.

Rates are provided by Housing Wire in conjunction with Polly. Rates are updated in real-time. While other mortgage rates sites show rates being quoted to borrowers with top credit profiles, the HousingWire Mortgage Rates Center shows **actual locked rates** with borrowers of all credit profiles. Rates are inclusive of locks that occur below par, at par and therefore consider discounts, points, and rebates. *Rates are based on a scenario with a 780 Credit Score, <60% LTV, Purchase transaction. As of 05/01/2025 – @12:00 PM EST.*

A chart titled 'A Quick Look Back,' summarizing key economic events from February 28 to March 6, 2025. The table includes Event Date, Event Name, Actual Data, Forecast, Previous Data, and Commentary. On February 28, the Core PCE Price Index for January increased 0.3% month-over-month, matching expectations and the same pace as in December 2024, indicating stable inflation. On March 3, the ISM Manufacturing PMI for February came in at 50.3, slightly below the forecast of 50.5 and down from January's 50.9, signaling continued but slower expansion in the manufacturing sector. On March 5, the ADP Jobs report showed private businesses added only 77,000 jobs in February, well below the forecasted 140,000 and marking the smallest gain in seven months. This follows an upwardly revised 186,000 jobs added in January. Also on March 5, the ISM Non-Manufacturing PMI for February rose to 53.5, surpassing both the forecast of 52.6 and January's 52.8. The increase reflects stronger growth in the services sector, with business activity, new orders, employment, and supplier deliveries all expanding for the third consecutive month—the first such streak since May 2022. On March 6, Initial Jobless Claims for the week ending March 1 dropped to 221,000, better than the forecasted 235,000 and down from 242,000 the previous week. This marks a return to historically low levels following a brief two-month high in earlier periods.

Market Commentary

Interest rates for the week of April 25^th to May 1^st decreased slightly. Mortgage interest rates have been volatile and occasionally increasing over the last several weeks. However, a lot of economic data will be released over the next week, and depending on what the data reveals, we might see some fluctuations.

Federal Reserve policymakers have signaled that short-term interest rates will remain unchanged as they wait for clearer signs that inflation is nearing the U.S. central bank's 2% goal or until there is a whiff of a deteriorating job market.

The data so far has presented neither of those scenarios to the Fed, and though economists say the real drag from President Donald Trump's aggressive import tariffs lies ahead, there is a great amount of uncertainty over where the policies will end up and the degree and timing of their impact on prices and jobs.

Fed Watch: Target rate (in bps) possibilities, according to the CME Group (as of 05/01/2025 – 12:00 PM EST):

Market Review: Optimal Blue's Production Metrics:

A chart titled: "Rate Lock Volume by Loan Purpose"

A chart titled "Mix of Business by Loan Product"

Personal Consumption Expenditures (PCE) through March 2025:

A graphic titled "U.S. Home Price Insights - March 2025" with information on national home price growth data from January 2025. Current month-over-month is 0.04% and current year-over-year is 3.3%. Forecast month-over-month is 0% and year-over-year is 3.6%. Affordability Meter: national median home price is $375,000 and income required to afford a median-priced home is $83,400.

Fannie Mae: April 2025 Economic and Housing Outlook:

A graphic titled "Top 10 Hottest Markets".

A graphic titled "Which areas are affordable?" Tracking the top 5 highest and lowest median sales prices. Markets to watch: markets with "very high" risk (>70% probability) of price decline.

Housing April 28th Weekly Update: Inventory up 1.3% Week-over-week, Up 31.0% Year-over-year:

A chart titled "Single Family Serious Delinquency Rates (90+ days or in foreclosure).

Good Growth

While a recession may well be in the offing or already here, the dismal 25Q1 GDP reading of -0.3% Q-o-Q annualized in no way feeds that narrative! Imports rose an astounding 41%, which single-handedly pulled GDP down five percentage points, as US firms worked to front-run tariffs. And the resulting rise in inventories boosted GDP by 2.8 percentage points. The economy was fundamentally healthy, and underlying growth was probably 2%.

- Elliot F. Eisenberg, Ph.D., Economist

News You Can Use

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Interest rate and annual percentage rate (APR) are based on current market conditions as of 05/01/2025, are for informational purposes only, are subject to change without notice and may be subject to pricing add-ons related to

property type, loan amount, loan-to-value, credit score and other variables. Estimated closing costs used in the APR calculation are assumed to be paid by the borrower at closing. If the closing costs are financed, the loan, APR and payment amounts will be higher. Contact us for details. Additional loan programs may be available. Accuracy is not guaranteed, and all products may not be available in all borrower's geographical areas and are based on their individual situation. This is not a credit decision or a commitment to lend. actual interest rate, APR, and payment may vary based on the specific terms of the loan selected, verification of information, your credit history, the location and type of property, and other factors as determined by Prosperity Home Mortgage, LLC. Not available in all states. Rate is as of 05/01/2025 and is subject to change at any time without notice. Opinions, estimates, forecasts, and other views contained in this document are those of Freddie Mac's economists and other researchers, do not necessarily represent the views of Freddie Mac or its management, and should not be construed as indicating Freddie Mac's business prospects or expected results. Although the authors attempt to provide reliable, useful information, they do not guarantee that the information or other content in this document is accurate, current, or suitable for any particular purpose. All content is subject to change without notice. All content is provided on an "as is" basis, with no warranties of any kind whatsoever. Information from this document may be used with proper attribution.

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Friday, May 2, 2025