Mortgage Rates, Buyer Demand, and a Fed Update | May 2025 Housing Trends

If you're thinking about buying or selling a home this spring, you’ll want to stick around. We’ve got some surprising — and exciting — updates on mortgage rates, inventory, and why buyers are jumping back into the market. Let’s break it all down.

Mortgage Applications Up 51%

Mortgage applications are up 51% from this time last year. Yep, you heard that right — 51%! Realtor.com’s senior economic analyst, Hannah Jones, called the jump 'somewhat surprising but altogether positive.'

So, what’s behind this surge? I think it’s a combination of pent-up demand, falling interest rates, and more inventory. In fact, there are 27% more homes on the market right now compared to last year.

Buyers who’ve been sitting on the sidelines due to limited options and high rates are finally making their move. And we’re seeing it firsthand — our team saw a 54% increase in contracts and a 64% jump in signed listings just in April.

Rates Dip, Buyers Move Fast

Over the last few weeks, mortgage rates have dipped. As of May 1st, the average 30-year fixed rate is 6.76%, down from 6.81% the week before — and nearly half a percentage point lower than this time last year.

Even a small rate drop can make a big difference. On a $400,000 loan, that half-point could save you around $1,500 per year. Buyers are definitely paying attention and moving fast.

More Homes, More Opportunity

Lower rates combined with more affordable homes hitting the market are making for a strong spring buying season.

We’re seeing smart sellers list now to take advantage of rising demand and lower competition. If you're curious what your home is worth, check out the free valuation link in the comments — it only takes a minute.

What’s Going On With the Fed?

Now let’s talk about the Federal Reserve — because while they don’t directly set mortgage rates, their decisions have a big influence.

At their May meeting, the Fed held rates steady in the 4.25% to 4.5% range. But they’re not planning any preemptive cuts yet. Inflation is still running above the 2% target, but not by much, and it’s at a 4-year low. Fed Chair Jerome Powell said, 'It’s not a situation where we can be preemptive.'

My take? The Fed is often two steps behind — whether it’s raising or lowering rates — and I don’t think this time is any different.

They’re also juggling a lot of uncertainty — from a strong job market to slower GDP growth, and now tariffs. Negotiations with trade partners could have a big impact on where we go from here.

What This Means for Buyers and Sellers

If you’re a buyer, now might be the time to get pre-approved and lock in a lower rate before they bounce back. And if you’re a seller, more buyer activity means more showings — and more offers.

Whether you’re buying, selling, or just staying informed — Who You Hire MATTers!