Spending Bill Uncertainty Adds Pressure to Mortgage Markets

Although no major economic reports were released this week, mortgage markets remained volatile due to shifting headlines. Investor attention rotated from government spending to trade policy, and while the noise was constant, mortgage rates ended the week only slightly higher.

Investors Shift from Spending Bill to Tariffs

During the early part of the week, focus centered on the proposed government spending bill. Investors weighed the potential impact of large-scale tax cuts and increased federal spending, both of which could drive up the national deficit. As the government issues more bonds to cover its shortfalls, yields may need to rise to attract buyers, putting upward pressure on mortgage rates. However, by Friday, tariffs again became the dominant theme. President Trump’s announcement of a proposed 50 percent tariff on European Union imports starting June 1 quickly shifted attention back to trade tensions.For real estate, the back-and-forth between spending and trade policy creates an uncertain outlook. Buyers may find short-term opportunities if rates ease temporarily, while sellers should monitor interest rate trends closely to time their listings effectively.

Existing Home Sales Dip, But Inventory Improves

In April, existing home sales edged down from March, falling below expectations to the slowest pace for the month since 2009. The median price climbed to $414,000, a new record for April and two percent higher than last year. While inventory remains tight at a 4.4 month supply, below the six month level typical for a balanced market, this is the highest inventory seen in five years and represents a 20 percent increase compared to a year ago. For homebuyers, improved inventory is a welcome development, offering more options in a historically tight market. For sellers, rising inventory may increase competition, reinforcing the importance of strategic pricing and marketing.

New Home Sales Beat Expectations

New home sales showed strength, rising 11 percent from March and three percent above last year’s level. The median new home price dipped to $407,200, down two percent from the previous year. The supply of new homes remains near its highest level since 2007, providing some relief for buyers seeking new construction.For buyers, new construction offers additional paths to homeownership and may relieve pressure in the resale market. For sellers of existing homes, the appeal of newly built inventory underscores the need to present properties in top condition to remain competitive.

Home Builder Confidence Falls Sharply

April housing starts were mixed. Total starts rose two percent, but single family starts dropped another two percent to their lowest level since July 2024. Building permits for single family homes also fell five percent. The builder sentiment index from the NAHB dropped to an 18 month low, as uncertainty about rising costs and tariffs complicated pricing strategies.For the real estate market, lower builder confidence may restrict future supply, potentially supporting home values but also limiting availability. Buyers and sellers should pay close attention to construction trends, as they shape the trajectory of the market in the months ahead.

Real Estate Takeaway

This week highlighted how quickly mortgage market conditions can shift based on political and economic developments. For buyers, slightly higher rates may create urgency but are still within attractive ranges historically. For sellers, the broader housing market remains active, though new inventory and economic concerns make proper pricing and presentation more critical than ever.