April 15, 2025 – The Tariff Wars Have Arrived

Economic Commentary

There are plenty of wars going on around the world. Ukraine and Gaza are just a few of the hot spots that have been in the news over the past few years. Now we have started a new war, only it does not involve guns – unless you are purchasing them.  The tariff wars are raging and though the rhetoric originates from our country, the effects are likely to be witnessed in every corner of the globe. And we expect that some countries will be affected more deeply than others.

In America, some industries will love the tariffs. For example, our shrimping industry has been decimated by overseas competition. Of course, the leveling of the playing field is likely to mean higher prices for consumers. Other industries are dead set against tariffs.  This includes the homebuilding industry, where March lumber prices hit their highest levels in two and a half years. In an economy in which home prices are already at record levels, higher lumber prices will likely help make homes even less affordable.

Where will this all lead?  The results could lead us in a few different directions. Perhaps negotiations limit the effects of tariffs and life goes on.  Or higher prices could cause a slowdown in our economy. As we have mentioned previously, a tariff-induced economic slowdown could cause interest rates to fall. Significantly lower interest rates would boost home affordability more than higher lumber prices would hurt home affordability. In turn, that would boost the economy.  As always, we will have to wait until these scenarios play out.

Weekly Interest Rate Overview

The Markets. If you use the Freddie Mac Mortgage Rate Survey as a benchmark, it looks as though rates are stable from week-to-week.  In reality, due to the tariff wars and pauses, we are seeing extreme volatility from day-to-day. According to the survey, 30-year fixed rates decreased slightly to 6.62% from 6.64% the week before. In addition, 15-year loans remained at 5.82%. A year ago, 30-year fixed rates averaged 6.86%, slightly higher than today. Attributed to Freddie Mac: “The average 30-year fixed-rate mortgage continues to trend down, remaining under 7% for the twelfth consecutive week. As purchase applications continue to climb, the spring homebuying season is shaping up to look more favorable than last year.” Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

Real Estate News

A housing survey found that one-in-four homeowners have plans to take out a new home-equity loan this year, with Gen Z respondents showing the most interest. The share planning to use the proceeds for upgrading their home widened 8 percentage points from last year. Married couples have substantially more equity than singles. ServiceLink released findings from its annual housing survey, which gathered insights from 1,526 individuals who have either successfully purchased or attempted to purchase a home over the past four years. Interviews were conducted from November 18, 2024, to December 5, 2024. Approximately 25% of respondents indicated they intend to secure a home-equity loan within the year. This marks a slight decline from the 28% share reported in 2024 and a pronounced drop from 2023, when 44%, planned to obtain such financing. At 34%, Gen Z respondents, those who were born between 1997 and 2012, exhibited the strongest interest in home-equity borrowing, with 34% planning to close a loan this year. But only 8% of baby boomers, those who were born between mid-1946 and mid-1964, had such plans. Both millennials, defined as individuals born between 1981 and 1996, and Gen X, those born between 1965 and 1980, reported nearly identical levels of interest in home-equity loans, with 32% of each demographic planning to secure financing. Home improvements were cited as the primary motivation by 56% of the respondents, making it “the top motivator for respondents to take out a home equity loan this year.” The share widened from 48% in 2024. Debt consolidation emerged as another significant purpose, with 26% of respondents stating they intend to use loan proceeds to pay down outstanding obligations.  Source: Home Equity Lending News

Hispanics are becoming homeowners at a quicker rate than other racial or ethnic groups, and they’re buying at younger ages, on average.  Hispanics accounted for 35% of U.S. homeownership growth last year, the largest share of any racial or ethnic group, according to a new report from the National Association of Hispanic Real Estate Professionals. Of the Hispanic buyers, 42.8% were under the age of 45, compared to 37.6% of non-Hispanic new buyers, the report said.  “We’re seeing that young Latinos are aging into prime home ownership and household formation years,” said NAHREP Research Director Jaimie Smeraski, speaking at a conference hosted by NAHREP in Washington, DC. “Some of the data continues to show, year over year, that a larger share of Hispanic home purchase originations are going to younger borrowers compared to non-Hispanics.”  First-time homebuyers are faced with high interest rates and a dearth of affordable options in most markets, but Latinos remained determined to purchase, the report said. Many see homeownership as key to building generational wealth and securing their family’s future in the U.S. and are willing to pursue flexible options to attain it, such as housing multiple generations under one roof and relocating to more affordable regions.  Source: NAHREP

Redfin found that homeownership rates for Gen Z and millennials were stagnant in 2024. For Gen Z, 26.1% of the group owned their home last year. That compares with 26.3% in 2023 and 26.2% in 2022. And for millennials, 54.9% owned their homes in 2024, compared with 54.8% in 2023.   In comparison, the two older major generations—Gen X and Baby Boomers—saw more significant increases. In 2024, 72.9% of Gen X members owned their homes, up from 72% in 2023. Additionally, 79.6% of Baby Boomers owned their residences, up from 78.8%. Redfin noted increases along those lines are fairly standard for those generations, but you’d expect Millennials and Gen Z–as they get married, progress in their careers and start families–to see more growth. “Homeownership is still a symbol of success and stability for many Americans, but the nation’s culture is shifting with the economic times,” said Redfin Chief Economist Daryl Fairweather. “Some young people are placing less emphasis on owning their own home because they’re prioritizing flexibility, while others continue renting because they can’t afford to buy.” Redfin also compared current generations’ home ownership rates at different ages. For example, 32.6% of 27-year-old Gen Zers owned their homes in 2024, compared with 38.4% of Gen Xers when they were 27 and 40.5% of Baby Boomers when they were the same age. And, 56% of 35-year-old Millennials owned their homes in 2024, compared with 59.4% of 35-year-old Gen Xers and 61.5% of 35-year-old Baby Boomers.  Source: Mortgage Bankers Association