The Mortgage Economic Review is a monthly summary of Key Economic Indicators, Data, and Events pertinent to Mortgage, Housing, and Finance Professionals.

 

AT A GLANCE – Key Economic Events and Data released during May 2025

• Interest Rates: The 10-year Treasury yield rose to 4.41% (May 30) from 4.17% (Apr 30).
• Housing: Existing Home Sales fell 0.5% (-2.0% YoY), New Home Sales jumped 10.9% (+3.3% YoY), and Home Prices are up 4.0% YoY.
• Labor: The US Economy created 177,000 New Jobs during April. The Unemployment Rate rose to 4.2% in April. Wages are growing at 3.8% YoY.
• Inflation: CPI rose 0.2% in April (+2.3 YoY), and PCE rose 0.1% (+2.1% YoY).
• The Economy: US GDP contracted at a 0.2% annualized rate in 1Q2025 (+ 2.1% YoY).
• Consumers: Retail Sales rose 0.1% in April (+5.2% YoY), and Consumer Confidence jumped 14% in May (+3.3% YoY).
• Stock Markets rose in May: Dow +3.9%, S&P +6.1%, Nasdaq +9.6%.
• Oil Prices rose to $61/Barrel (May 30) from $58/Barrel (Apr 30).

 

Interest Rates and Fed Watch

The Fed continued its “Wait-and-See” approach to Monetary Policy. The Fed left Interest Rates unchanged after the May 7th FOMC Meeting with the Fed Funds Rates at 4.25% – 4.50%. Fed Chairman Jerome Powell said: “We don’t think we need to be in a hurry. We think we can be patient…The risks of higher unemployment and higher inflation appear to have risen, and we believe that the current stance of monetary policy leaves us well positioned to respond in a timely way to potential economic development…That leaves us in a good place to wait and see.”

FedSpeak Translation: Don’t expect the Fed to cut Interest Rates any time soon. They are concerned Tariffs will exacerbate Inflation and could lead to Stagflation.

Also, in May, Moody’s downgraded US Sovereign Debt from Aaa to Aa1. The House Passed the “One Big Beautiful Bill Act” and it is now in the Senate for approval. The combination of the new Tax Bill and Tariffs has Market Analysts concerned that the US Budget Deficit and Total Sovereign Debt (currently at $36T) will continue to grow unabated. Consequently, longer term Interest Rates are up, and the yield curve has steepened. The next FOMC meeting is June 17th and 18th. Fed Watchers expect the Fed to keep Interest Rates unchanged.

• 10-Year T-Note Yield rose to 4.41% (May 30) from 4.17% (Apr 30).
• 30-Year T-Bond Yield rose 4.92% (May 30) from 4.66% (Apr 30).
• 30-Year Mortgage rose to 6.89% (May 29) from 6.76% (Apr 30).
• 15-Year Mortgage rose to 6.03% (May 29) from 5.92% (Apr 30).

 

Housing Market Data Released during May 2025

More Existing Homes are being listed for sale. The Inventory of Existing Homes jumped 9.0% in April from 1,330,000 to 1,450,000. Compare that to a year ago, when there were 1,200,000 Existing Homes for sale. The Inventory of New Homes stands at 504,000 units, which is up 8.6% YoY. Higher Inventory moderates prices. The FHFA and Case-Shiller Home Price Index fell slightly in April. It’s not a Buyer’s Market yet, but the tide may be turning.

• Existing Home Sales (closed deals in April) fell 0.5% to an annual rate of 4,000,000 homes (3,630,000 SFR + 370,000 Condos), down 2.0% in the last 12 months. The median Single-Family Home price is $418,000, up 1.7% YoY. The Median Condo price is $370,100, up 1.4% YoY. Homes were on the market for an average of 29 days. Currently, 1,450,000 homes are for sale, up 20.8% YoY.
• New Home Sales (signed contracts in April) rose 10.9% to a seasonally adjusted annual rate of 743,000 homes, up 3.3% YoY. (683,000 New Homes were sold in 2024 and 668,000 in 2023). The median New Home price is $407,200 (Peak of $496,800 in Oct 2022). The average price is $518,400 (Peak of $568,700 in Dec 2022). There are approximately 504,000 New Homes for sale, up 8.6% YoY (compared to a low of 281,000 in October 2020).
• Pending Home Sales Index (signed contracts in April) fell 6.3% to 71.3 from 76.5, down 2.5% YoY.
• Building Permits (issued in April) fell 4.7% to a seasonally adjusted annual rate of 1,412,000 units – down 3.2% YoY. Single-Family Permits fell 5.1% to an annual pace of 922,000 homes, down 6.2% YoY.
• Housing Starts (excavation began in April) rose 1.6% to a seasonally adjusted annual rate of 1,316,000, down 1.7% YoY. Single-Family Starts fell 2.1% to 927,000 units, down 12.0% YoY.
• Housing Completions (completed in April) fell 5.9% to a seasonally adjusted annual rate of 1,458,000 units – down 12.3% YoY. Single-Family Completions fell 8.0% to an annual adjusted rate of 943,000 homes – down 16.6% YoY.
• S&P/Case-Shiller 20 City Home Price Index fell 0.1% in March, up 4.1% YoY.
• FHFA Home Price Index fell 0.1% in March, up 3.7% YoY.
• NAHB Index for April fell 15.0% to 34 from 40 from the prior month, down 24.4% YoY.

 

Labor Market Economic Data Released during May 2025

The Economy is still creating New Jobs but at a slower pace. Despite all the uncertainty and volatility in the Stock and Bond Markets, the Labor Market’s resilience has baffled many Economists. The Unemployment Rate is still low, and Wage growth is outpacing Inflation. There are over 7,000,000 open jobs. Not bad. The only downside to a strong Labor Market is the specter of Wage Driver Inflation – the Wage-Price Spiral.

• The Economy created 177,000 New Jobs during April.
• The Unemployment Rate was unchanged in April from 4.2% in March and 4.1% in February.
• The Labor Force Participation Rate rose to 62.6% in April from 62.5% in March.
• The Average Hourly Wage rose 0.2% during April, up 3.8% YoY.
• Job Openings fell to 7,192,00 in March and 7,480,000 in February. In 2024, the annual average number of job openings was 7,800,000.

 

Inflation Economic Data Released during May 2025

Inflation Data from the last several months has been choppy and unpredictable. To get a better picture, look at the trend and Year-over-year numbers (YoY). Inflation is trending lower. Even though monthly data is erratic, the trend shows Inflation is approaching the Fed’s 2.0% target. That has been the pattern with inflation over the past year – when you think it is under control, you get a surprise. Add to this the uncertainty around Tariffs. Economists fear that Tariffs will exacerbate Inflation, but there is no certainty that we will get Tariffs.

• CPI rose 0.2%, up 2.3% YoY     |  Core CPI rose 0.2%, up 2.8% YoY
• PPI fell 0.5%, up 2.4% YoY       |  Core PPI fell 0.1%, up 2.9% YoY
• PCE rose 0.1%, up 2.1% YoY     |  Core PCE rose 0.1%, up 2.5% YoY

 

GDP Economic Data Released during May 2025

The 2nd estimate of 1st Quarter 2025 GDP showed the US Economy contracted at a 0.2%  annualized rate, up 2.1% YoY.  This is a little better than the 1st estimate at -0.3%, but it’s still a contraction. Just like last month, the upcoming threat of Tariffs resulted in a flurry of Imports. That flurry created a large negative Trade Balance and weighed on GDP. The Economy is slowing, but we can’t say we are headed for a Recession yet.

 

Consumer Economic Data Released during May 2025

Consumer data released in May was positive. Consumer Confidence jumped 14.5% after falling 8.4% the previous month. Personal Income, Spending, and the Savings Rate all increased. Despite the backdrop of stubborn Inflation and a looming Trade War, Consumers are secure in their jobs, Incomes are up, they are saving money, and they continue to spend but at a slower pace.

• Retail Sales rose 0.1% during April, up 5.2% in the last 12 months.
• Consumer Confidence Index rose 14.4% to 98.0 from 85.7 in April, down 3.3% YoY.
• Personal Income rose 0.8% in April, up 5.5% YoY.
• Personal Spending rose 0.2% in April, up 5.4% YoY.
• Personal Savings Rate rose to 4.9% in April from 4.3% in March.

 

 

Energy, International, and Things You May Have Missed

• West Texas Intermediate Crude rose to $61/Barrel (May 30) from $58/Barrel (Apr 30).
• North Sea Brent Crude rose to $64/Barrel (May 30) from $63/Barrel (Apr 30).
• Gasoline (Wholesale Futures) fell to $2.03/Gal (May 30) from $2.04/Gal (Apr 30).
• Natural Gas rose to $3.45/MMbtu (May 30) from $3.35/MMBtu (Apr 30).
• Robert Francis Prevost was elected as the new Pope and renamed Pope Leo XIV. He was born and raised in Chicago and is the first American Cardinal to become Pope.

 

The Mortgage Economic Review is a concise summary of Key Economic Data that influences the Mortgage and Housing Markets. It’s a quick read that keeps busy Professionals updated on important Economic Information. Feel free to share this with colleagues in the Mortgage, Housing, Finance, and Banking business. To have the Mortgage Economic Review emailed to you each month, click here.

  

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This Economic Review is for informational and educational purposes only and should not be construed as investment, legal, financial, or mortgage advice. The information is gathered from sources believed to be credible and may be opinion-based and editorial in nature. Mortgage Elements Inc does not guarantee or warrant its accuracy or completeness, and there is no guarantee it is without errors. This newsletter is primarily intended for use Housing and Finance Professionals but it can be useful for anyone interested in Economics. This newsletter is not an advertisement to extend credit or solicit mortgage originations. © Copyright 2025 Mark Paoletti, Mortgage Elements Inc, All Rights Reserved.