Lumber prices, inflation fears, and Fed rate moves still cloud the outlook for homebuyers
President Donald Trump has announced a temporary rollback of sweeping tariff increases on most US trade partners, dropping the rate to 10% for 90 days to allow time for trade negotiations.
The White House’s move followed a week of upheaval triggered by new reciprocal tariffs on imports from nearly 90 nations. Despite the temporary retreat, Trump simultaneously raised duties on Chinese goods to 125% “effective immediately,” citing the “lack of respect that China has shown to the World’s Markets.” In response, China hiked its tariff rate on US imports to 84%.
Trump said more than 75 countries have reached out to US officials since last week’s announcement, seeking to avoid a prolonged trade conflict.
“Well, I thought that people were jumping a little bit out of line,” the president said when asked about the sudden shift. “They were getting yippy, you know, they were getting a little bit yippy, a little bit afraid.”
Treasury Secretary Scott Bessent insisted the reversal had been planned all along. “This was his strategy all along,” Bessent told reporters, despite earlier White House denials that a pause was in the works.
The stock market rallied sharply on the news. The S&P 500 surged 7%, its biggest one-day gain in five years, reversing four consecutive days of losses.
Ripple effects on mortgage rates
The broader economic uncertainty is already being felt in the housing sector. Mortgage rates dropped after the tariff announcement, with the average 30-year fixed mortgage falling to 6.65% on Friday, its lowest point in months. Throughout March, Bankrate data showed rates fluctuating narrowly, from 6.75% at the start to the same level at month’s end.
Colin Robertson, founder of The Truth About Mortgage, said the outlook remains murky.
“The keyword right now is uncertainty,” Robertson said. “Nobody knows what tomorrow holds when it comes to tariffs or government policies, and thus mortgage rates are in a holding pattern of sorts.”
Read next: New home costs expected to surge with new duties, tariffs
Rates are expected to drift closer to 6% by 2025, Robertson noted, but not for the right reasons.
“The concern is that lower mortgage rates could be the result of a deteriorating economy. If US families are worried about job security and affording the high cost of living, they’ll be less likely to take on mortgage debt, even if rates get cheaper in a downturn.”
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