Steady Rates, Rising Prices, and a Shifting Job Market
Market Insights – May 2025 | The Mortgage Gurus
As we head into May, the market is sending mixed signals—but there are key trends homebuyers, homeowners, and investors should pay attention to. From steady Fed rates to rising home values and a cooling job market, here’s what you need to know.
The Fed Is Holding—For Now
In its latest policy meeting, the Federal Reserve voted to keep the federal funds rate unchanged at 4.25% to 4.5%. This marks a continued pause in rate movement, as economic uncertainty, including the impact of recent tariffs, keeps the Fed cautious.
While the Fed doesn't directly control mortgage rates, its decisions influence how rates move in the broader economy. So far, the hold has helped keep mortgage rates relatively stable.
Chair Jerome Powell emphasized a “wait and see” approach, mentioning that the Fed is closely monitoring both inflation and employment. He used the word “wait” over 20 times during his press conference, making it clear they’re not rushing into any decisions.
Home Prices Continue to Trend Upward
Despite broader economic concerns, home values are still rising.
According to recent data from Cotality (formerly CoreLogic), prices rose 0.6% in March and 2.5% year-over-year. ICE also reported a 2.4% annual gain. Forecasts suggest that prices could continue climbing, with Cotality projecting a 0.9% increase in April and nearly 5% growth over the next 12 months.
This reinforces what many homeowners already know: real estate remains a powerful long-term investment. A $500,000 home appreciating at 5% annually could gain $25,000 in value within a single year—equity that builds wealth over time.
Job Seekers Are Starting to Feel the Pressure
Unemployment claims are still relatively low, but there’s a growing sign of strain beneath the surface.
Initial claims dropped to 228,000, but continuing claims remain elevated—hovering around 1.879 million. More importantly, people are staying unemployed longer: the median duration has increased from 9.8 to 10.4 weeks, and the average is now 23.2 weeks.
This trend suggests that while companies aren’t laying off large numbers, they’re also being more cautious about hiring. For job seekers, that means more competition and longer search periods.
What This Means for You
If you’re buying a home: Steady rates and rising home prices suggest that waiting could cost more. Locking in now may offer better long-term value.
If you’re refinancing: Keep an eye on mortgage rates. The Fed’s cautious stance may create a short window to act.
If you’re watching the market: Know that uncertainty isn’t going away—but clarity will come from understanding the trends and planning ahead.
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Source: MBS Highway
