Mortgage rates are declining, following the 10-year U.S. Treasury yield, as investors seek safer investment options due to economic uncertainty. This trend could boost homebuyers’ purchasing power. However, the broader economy and tariffs on construction costs may limit their ability to take advantage of lower mortgage rates.
According to Realtor.com, falling rates would stimulate the housing market, but economic uncertainty will hold it back. The National Association of Home Builders found that tariffs are increasing the cost of constructing a new home by $9,200 on average, which could be passed onto consumers.
Existing-home prices have risen to a median of $398,400 in February, making it difficult for many households to afford a median-priced new home, which is already out of reach for 75% of U.S. households.
Despite the challenges, experts say that lower mortgage rates may still boost home sales. Lawrence Yun, NAR chief economist, stated that even during an economic recession, home sales can rise if mortgage rates decline.
The impact of tariffs on the economy and its ripple effects are significant concerns. President Trump’s tariff policies aim to punish foreign nations for what he perceives as exploitation, but they may lead to widespread pain, including business closures, layoffs, and higher prices for consumers.
Source: https://www.axios.com/2025/04/04/mortgage-rates-trump-tariffs