Plenty of buyers are still out there and ready to make a move even amid economic storm clouds, says mortgage VP
Federal Reserve chair Jerome Powell described the uncertainty mounting around the US economy as “unusually elevated” after its decision to hold interest rates steady last week – and that lack of clarity continued over the weekend as Trump administration officials appeared to suggest impending tariffs may not be as broad-based as originally expected.
The president has labeled April 2 the date sweeping so-called “retaliatory” tariffs against multiple countries are scheduled to come into play, as the US’s “Liberation Day”. But sector-specific exclusions are now likely, according to Reuters, in a potential further pullback after Trump eased most tariffs on Canada and Mexico earlier this month.
What that means for the future of the US housing market is anyone’s guess. The Fed seems to be sitting back while it waits to see how Trump’s tariff threats play out, and the outbreak of a trade war could put significant upward pressure on both home prices and overall inflation.
Some potential homebuyers may have stepped to the sidelines amid that widespread uncertainty – but others are probably pushing ahead with their purchase, according to William Raveis Mortgage regional vice president Melissa Cohn (pictured top).
She told Mortgage Professional America that a potential spike in homebuying costs and rate volatility if tariffs come into play would likely convince many hopeful buyers that now is the time to enter the market.
“I think this [uncertainty] has given some people pause, but others are saying ‘We’d better get in the game now.’ If the cost of building or buying a home is going to get more expensive, I’d rather buy now versus buying later.
“We’ve seen plenty about how these tariffs could increase the cost of construction and while I don’t think that anyone has provided a definitive [figure] to increases in the cost of the house, no-one wants to pay more if they can help it.”
US inflation slowed in February, with the annual consumer price index (CPI) rising by 2.8%, its lowest in four months. However, upcoming tariffs from President Trump could drive prices higher, creating inflationary pressure. https://t.co/BMWNwCy1UY
— Mortgage Professional America Magazine (@MPAMagazineUS) March 12, 2025
Rate volatility set to ramp up as trade war looms
After inching lower for much of the year to date, mortgage rates jumped last week – their first week-over-week increase for more than two months.
The average 30-year fixed mortgage rate across the US ticked up to 6.72%, compared with 6.67% the prior week, causing refinance activity to plunge.
For those who have been putting off a move, unpredictability about the direction of rates is a central reason to push on with a purchase now, Cohn said. “There are people that are moving ahead: ‘I’m being relocated and I need to move for work. I’m going to have to make the move,’” she explained.
“They may be more conservative in the decision and the choice they make, but obviously with this fear of inflation they’d rather buy now and lock in before that actually happens.”
Buyers are still out there – but don’t expect a red-hot spring market
That’s not to say a spring market surge is on the way, with caution remaining the name of the game for many who were hoping to take the plunge before getting cold feet as the tariff chaos began to escalate.
Mortgage rates also don’t seem likely to fall much further in the months ahead, having lingered persistently between 6.5% and 7% throughout most of the year so far.
But if clarity emerges on the tariff front, and a trade dispute ends up being less fierce than first feared, a decent clip of homebuying could still be on the way for the remainder of the year, according to Cohn.
“I think that unfortunately, rates remain higher than we would like them to be and with all the uncertainty coming out of Washington on tariffs, the markets aren’t as robust as we would like them to be,” she said.
“But hopefully once those tariffs do come into play next month and we see what the real deal is with regard to their impact, people will become more confident in their ability to purchase and we’ll have a much stronger remainder of the year.
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