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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.
Market Commentary
Interest rates decreased slightly for March 7th to March 13th, 2025.
The Fed's next rate announcement will be made next Wednesday afternoon. Based on the current economic data, financial markets are pricing in 97% odds that the Fed will hold the fed funds rate steady, having also done so at its last meeting. That's the part we can feel pretty confident about: Virtually no one expects the Fed to raise or lower rates next week. Right now, financial markets see about a 90% probability that the federal funds rate will drop at least half a percentage point by December, with a majority predicting the first 2025 rate reduction in June.
But another very useful piece of information will be released Wednesday: the Fed's "dot plot" forecast for where it sees interest rates headed in the coming year. We only get this behind-the-curtain peek at central banker predictions once per quarter, with the last dot plot released in December 2024.
Fed Watch: Target rate (in bps) possibilities, according to the CME Group (as of 03/13/2025 – 12:00 PM EST):
Market Review: Optimal Blue's Production Metrics:
Home Values Have Grown Twice as Fast as Normal Since the Start of the Pandemic - Zillow Research
Local Housing Markets in February: Months of Supply
Here is a look at months-of-supply using NSA sales. Since this is NSA data, it is likely months-of-supply will increase into the Summer. Months in red are areas that are seeing 6 months of supply now and will likely see price pressures.
Active Inventory in February: Summary of active listings for these early reporting housing markets.
New Listings In February:
Closed Sales in February:
Inflation Importance
February CPI inflation was a light 0.2% M-o-M and 2.8% Y-o-Y, core was also 0.2% M-o-M but 3.1% Y-o-Y. All readings were better than last month. Fuel price declines helped, as did slowing rents. And Powell’s “super-core” index, which is core minus rents, was a benign 0.2%. Importantly, this decline in inflation is probably a reflection of softening domestic demand. If it keeps up, tariffs aside, rate cuts will materialize.
- Elliot F. Eisenberg, Ph.D., Economist
News You Can Use
- Jobless claims little changed, while impact from government spending cuts expected later this spring
- Bond rally fizzles despite cool CPI inflation reading. What that says about investors.
- Inflation rate eased to 2.8% in February, lower than expected
- Year-over-Year Declines for Construction Job Openings
- Is the US housing market becoming a buyer-friendly market?
- Take a look inside the world's largest 3D printed housing development
- More homeowners facing foreclosure – is a housing crisis next?
- This step is ‘really important’ if you plan to sell your home in 2025, economist says
Interest rate and annual percentage rate (APR) are based on current market conditions as of 03/13/2025, 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 03/13/2025 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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