Market Update - February 8, 2025

Saturday, February 8, 2025

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.

Rates are provided by Housing Wire in conjunction with Polly. Rates are updated in real-time. Polly data is calculated using actual locked rates. Rates are inclusive of locks that occur below par, at par and therefore consider discounts, points, and rebates. *Rates are based on a scenario with a 780 Credit Score, <60% LTV, Purchase transaction. As of 02/07/2025 – 9:00 AM EST.*

A chart titled 'A Quick Look Back,' summarizing key economic events from January 31 to February 6, 2025. The table includes Event Date, Event Name, Actual Data, Forecast, Previous Data, and Commentary. On January 31, the Core PCE Price Index for December increased by 0.2% month-over-month, in line with expectations and slightly above November’s 0.1% gain, reflecting steady inflation trends. Also on January 31, Employment Costs for Q4 rose by 0.9%, meeting forecasts and slightly exceeding the 0.8% increase from Q3, as employers balanced labor market conditions with controlled wage growth. On February 3, the ISM Manufacturing PMI climbed to 50.9, beating the forecast of 49.8 and surpassing December’s 49.3. This marks the first expansion in the manufacturing sector after 26 consecutive months of contraction. On February 4, USA JOLTS Job Openings for December fell to 7.6 million, below the forecasted 8.0 million and November’s 8.098 million, indicating a continued cooling of the labor market. On February 5, the S&P Global US Services PMI dropped to 52.9 from December’s 56.8, slightly above the preliminary estimate of 52.8 but marking the slowest services sector expansion since April 2024. Also on February 5, the ISM Non-Manufacturing PMI for January declined to 52.8 from December’s 54.1, below the forecasted 54.3, showing that while the services sector remains in expansion, growth is slowing."

Market Commentary

Interest rates remained flat for the week of January 31^st to February 6^th. The average rate on a 30-year mortgage in the U.S. eased for the third week in a row, a smidgen of relief for prospective home shoppers getting into the market before the busy spring homebuying season starts. Mortgage rates will be near 6.5%. – Jessica Lautz, deputy chief economist and vice president of research at the National Association of Realtors. If you’re financially ready to purchase a home, there’s no reason to wait, because mortgage rates are expected to stay relatively stable. “While there could be weekly volatility in the mortgage rate, it is not expected to have wild swings that would make or break a transaction. Home buyers who are financially ready to purchase should also keep in mind that mortgage rates are one component to housing affordability. Home prices are expected to increase and that also impacts the overall monthly mortgage payment,” says Lautz.

Fed Watch: Target rate (in bps) possibilities, according to the CME Group (as of 02/06/2025 – 9:00 AM EST):

Market Review: Optimal Blue's Production Metrics:

CoreLogic: US Home Prices Increased 3.4% Year-over-year in December:

Builders’ Top Challenges for 2025:

Good GDP

While 24Q4 GDP came in at a slightly disappointing 2.3% annualized rate, down from 3.1% in 24Q3, and 24Q4 expectations of 2.6%, consumer spending, which represents almost 70% of GDP, was up a very strong 4.2%. Moreover, the Fed’s favorite inflation measure, core PCE, came in at a bond friendly 2.5%/annum. Much of GDP weakness was due to the drawing down of business inventories and the Boeing strike. Looking good!

- Elliot F. Eisenberg, Ph.D., Economist

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Interest rate and annual percentage rate (APR) are based on current market conditions as of 01/30/2025, 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 HomeServices Lending, LLC. Not available in all states. Rate is as of 01/30/2025 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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