The U.S. housing market, declining interest rates bring renewed optimism

The U.S. housing market stands at a crossroads amid uncertainty surrounding the Trump administration’s tariff policies. Recently, mortgage rates have fallen below 6% for the first time since 2022. This decline is driven by a combination of tariff policy uncertainty and sluggish economic growth.

According to data from CNBC citing MortgageNewsDaily, the average 30-year fixed mortgage rate has dropped to 5.99%. The uncertainty caused by the Trump administration’s tariff policies has fueled risk-averse sentiment in the bond market, leading to lower bond yields. Additionally, the latest reported U.S. economic growth rate for the fourth quarter of last year was 1.4%, well below expectations, which also contributed to the rate decline.

President Trump is considering large-scale purchases of mortgage-backed securities as a means to lower mortgage rates ahead of the November midterm elections. This move aims to stimulate the housing market by reducing borrowing costs. In fact, the housing industry is hopeful that this rate decrease will boost housing transactions.

Meanwhile, the U.S. housing market remains hesitant due to high borrowing costs and soaring home prices, resulting in sluggish sales. Particularly, existing homeowners who bought during low-interest periods are reluctant to trade up, causing a market stalemate.

How much positive change this rate decline will bring to the U.S. housing market remains to be seen. However, experts predict that the combination of policy adjustments and falling rates could help revive market activity.