CHM Blog

Good news, with asterisks

After a sluggish start to the year, with spring flowers comes a breath of fresh air to the housing market. Existing-home sales climbed 1.7% month-over-month, reversing a sharp January decline and hinting that those blooms could arrive with some genuine momentum. The National Association of Realtors (NAR) is cautiously optimistic — and for good reason.

Realtor.com’s Melissa Dittman Tracey reports that at the heart of the story is a shift in affordability. Mortgage rates, which hovered near 7% at the start of 2025, have dropped to around 6%, and that single percentage point is doing a lot of quiet work. Buyers can have a quiet celebration as well, as that translates to roughly $2,000 back in their pockets each year. More importantly, it has expanded the pool of people who can actually qualify for a home loan — NAR estimates that 5.5 million additional households now meet the threshold, including 1.6 million renters who could potentially become first-time buyers.

Those buyers appear to be paying attention. First-timers made up 34% of existing-home sales in February, up from 31% a year ago — a modest but meaningful uptick that suggests younger and first-timers are beginning to act on improving conditions.

The broader affordability picture has brightened across every region of the country. NAR's Housing Affordability Index rose 10% in the Northeast, 11.7% in the Midwest, 14.1% in the South, and a striking 17% in the West — where existing-home sales jumped 8.2% last month alone. Wage growth is now outpacing home price growth by nearly four percentage points, a reversal that provides a genuine kick in the proverbial posterior for buyers who have been waiting out the market.

Sellers, for their part, are adjusting. The median existing-home price of $398,000 in February represents only a 0.3% increase from a year ago — a far cry from the feverish appreciation of recent years. Fewer homes are selling above asking price: about 14% in February, compared to 21% a year ago. And homes are staying on the market a bit longer, with the median sitting at 47 days versus 42 days a year prior. For buyers, that extra breathing room can make a real difference.

Inventory is building as well, up 2.4% from January and roughly 5% from a year ago. NAR chief economist Lawrence Yun has been vocal about why supply matters: without it, any surge in buyer demand will simply push prices up again. "That is why increasing supply is so important to help limit home price growth, improve housing affordability and boost transactions," he noted in the report.

The market still has a ways to go. Sales remain down 1.4% from a year ago, and despite job and wage growth that has outpaced pre-pandemic levels, home sales are still running about one million transactions below where they were in 2019. Cash buyers — including investors and equity-rich homeowners — accounted for 31% of sales, a competitive presence that first-timers must navigate. Distressed sales, however, remain a small slice of activity at just 3%.

Spring is the season when housing traditionally comes alive. While we can’t say it has yet fully sprung, it’s on its way.

Realtor, TBWS

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I'm among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Neutral

Mortgage rates are improving today. The MBS market worsened by -65 bps last week. This was enough to increase mortgage rates or fees. The market experienced high volatility last week.

This Week's Rate Forecast: Neutral

These are the three things that have the greatest ability to impact rates this week. 1) Geopolitical, 2) The Fed and 3) Central Banks.

1) Geopolitical: 3 weeks into the Iran conflict, geopolitical actions/news will continue to drive oil prices which will continue to have an overweighted impact on long bond yields.

2) The Fed: We will get the Federal Open Market Committee's Interest Rate Decision and Policy Statement on Wednesday followed by a live presser with Fed Chair Powell. The bond market does not expect any action at this meeting but will be looking for signs via votes for/against the policy statement and comments from Fed Chair on serious concerns over inflation with rising oil prices. We will also get the Atlanta Fed Business Inflation Expectations.

3) Central Banks: Our Fed is not the only Central Bank this week. We hear from at least 6 others which include the ECB, Bank of England, Peoples Bank of China and Bank of Canada. There cumulative outlook and policy changes can have an impact on pricing over the week.

Treasury Auction: We have an important 20 Year Treasury Bond auction on Tuesday.

This Week's Potential Volatility: High

This morning markets are seeing some bounce back from last week. Volatility has started high and is likely to stay that way all week.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

Richard Sardella has been actively managing and providing services in the mortgage industry for over 30 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

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