Reef Daily | March 05 2025

Housing Market Update

Latest Market Data (March 5, 2025) The US housing market continues to show significant regional disparities as revealed by data released in the past 24 hours. Weekly mortgage demand has surged by 20% higher according to figures published today, though this increase is primarily driven by refinancing activity rather than new purchases. Refinance applications have jumped 83% compared to last year, while purchase applications have increased by just 2%, despite inventory levels being 25-30% higher nationwide. According to the National Association of Realtors' latest figures, the overall inventory of available homes remains 16% lower than it was five years ago, contributing to persistent market tightness in many regions. Zillow's newest projections indicate U.S. home prices will rise by a modest 1.1% between January 2025 and January 2026, reflecting a cautious outlook for the year ahead. This comes as Fannie Mae has reportedly lowered its housing market forecast and projections for 2025.

Regional inventory data shows Texas exceeding pre-pandemic inventory levels by 20%, with Florida and Colorado also experiencing an abundance of available homes. Meanwhile, fifteen states, primarily in the Northeast and Midwest, including New Jersey and Pennsylvania, are operating with less than half their usual inventory, creating vastly different market conditions across the country. In Southeast Michigan, January 2025 data showed 1.7 months of inventory, representing a 43% increase from January 2024 levels, though this still constitutes a seller's market.

Mortgage Rates

Current rates as of March 5, 2025:

Type	Today's Rate	Last Week's Rate
30-year fixed	6.69%	6.88%
15-year fixed	6.00%	6.22%
5/1 ARM	5.90%	6.04%

Mortgage rates have dropped substantially in just the past couple of weeks according to the latest Zillow data released today. This decline has been primarily attributed to weaker economic data and growing fears of an economic slowdown. The implementation of tariffs on imports from Mexico, Canada, and China that went into effect yesterday (March 4, 2025) has pushed bond yields lower as markets anticipate reduced economic growth, with mortgage rates following this downward trend. Current 30-year fixed rates are hovering around 6.20%, down from February's average of 6.51%, while 15-year fixed rates have decreased to approximately 5.50% from last month's average of 5.84%.

Future Forecasts Market analysts have increased their expectations for Federal Reserve rate cuts, with traders now betting on three to four cuts throughout 2025 according to CME FedWatch data released earlier today. While lower mortgage rates present opportunities for homebuyers, industry experts warn that tariffs may simultaneously lead to higher home prices as construction costs increase. Realtor.com's chief economist Danielle Hale noted in comments today that "Rising costs due to tariffs on imports will leave builders with few options," forcing them to either pass higher costs to consumers through increased home prices or build smaller homes with fewer imported materials.

Notable Transactions

Commercial Highlights The Trump administration announced plans yesterday to potentially sell off hundreds of federal properties nationwide, representing one of the largest government real estate liquidations in recent history. Initially, 440 properties were identified for potential sale, with the list later revised to 320 properties classified as "non-essential to government functions". This substantial portfolio includes 15 properties in New York, 26 in Michigan, 14 in Illinois, 23 in Colorado, 16 in California, 21 in Maryland, 8 in Virginia, 17 in Georgia, and 24 in Texas. Officials from the General Services Administration stated that this initiative aims to ensure "taxpayers are no longer burdened with costs for vacant and underused federal office spaces". In Oregon specifically, 10 federal buildings have been designated for sale, including the Bonneville Power Administration building in Portland and the James A. Redden U.S. Courthouse in Medford.

Regional Activity The Northeast region continues to see extremely limited transaction activity according to real estate professionals reporting market conditions today. The metro Boston area in particular is experiencing what local agents describe as "insanely low" inventory levels, with properties selling quickly despite high prices. In contrast, Southeast Florida is witnessing increased listing activity, with the market showing signs of stagnation over the past year and early indications of price decreases according to reports from local agents.

Market Indicators

Economic Growth Forecast The Atlanta Federal Reserve's GDPNow model updated yesterday (March 4, 2025) has dramatically revised its first-quarter 2025 growth estimate downward to -2.8%, a significant drop from the 2.3% projection released just one week ago. This substantial revision primarily reflects recent declines in consumer spending, particularly on larger purchases such as vehicles and furniture. The model, which serves as a continuous estimate rather than a definitive forecast, will be updated again tomorrow, March 6, 2025.

Stock Market Performance Financial markets showed significant volatility in the past 24 hours, with major indices recording substantial losses. The Dow Jones Industrial Average fell approximately 1% while the Nasdaq composite dropped by roughly 2% in yesterday's trading. The recent market downturn has effectively eliminated all post-election gains for the S&P 500, reducing its gains since Election Day to just over 1%, down from a peak exceeding 6%. The yield on the 10-year Treasury bond also decreased yesterday amid growing concerns about economic slowdown.

Employment Outlook The Labor Department is scheduled to publish its monthly job market report this Friday, with economists estimating approximately 160,000 new jobs for February following January's disappointing figure of 143,000. This upcoming employment report will be particularly significant for real estate professionals as it may provide early signals about consumer confidence and purchasing power in the housing market throughout 2025.

Regional Developments

Northeast The Northeast region continues to face severe inventory constraints according to real estate professionals reporting today. New York City's metropolitan area is experiencing what local agents describe as "extremely parched" conditions, with available inventory actually decreasing since the winter months. Long Island, NY is showing some modest signs of improvement with a slight increase in activity and more favorable pricing trends according to agents active in the market. The inventory situation in New Jersey remains particularly challenging, with real estate professionals noting little change in available listings despite expectations for a spring market boost.

Midwest Markets across the Midwest are showing mixed signals in reports from the past 24 hours. In Northeast Ohio, real estate professionals are observing properties sitting on the market longer than in previous months, with homes no longer going under contract within days of listing. Southern Wisconsin presents a similar pattern, with quality homes now lingering for several weeks before receiving accepted offers in neighborhoods where properties would typically sell within 24 hours during the previous year. The suburbs of Detroit continue to face significant challenges with a shortage of available properties, with the few listings often falling into categories of poor condition, overpricing, or both.

South Texas inventory levels now exceed pre-pandemic figures by 20%, creating notably different market conditions than other regions. Several real estate professionals in Southeast Florida report a significant increase in property listings along with market stagnation extending nearly a year, with early signs of price decreases becoming evident. This regional divergence highlights the increasingly fragmented nature of the national housing market, with southern states generally showing more favorable conditions for buyers than other regions.

West Colorado joins Texas and Florida in experiencing an abundance of homes for sale according to today's reports, creating more favorable conditions for buyers than in other regions. The Greater Seattle region is described as "buzzing" by local real estate professionals, particularly across the Puget Sound area. In Portland, three federal buildings, including the Bonneville Power Administration building, have been designated for potential sale as part of the federal property disposition initiative announced yesterday.

Construction Activity

No significant new construction data has been released in the past 24 hours. However, industry analysts noted today that rising costs due to newly implemented tariffs could significantly impact the construction sector. Realtor.com's chief economist warned that builders will face difficult choices between passing higher materials costs to consumers through increased home prices or reducing the size and features of new housing units. This situation may further constrain new housing supply in markets already facing inventory challenges.

Sources

This newsletter is for informational purposes only and should not be considered as financial advice.

March 05 2025