August 5, 2025 – The Fed Speaks, The Economy Awakens

Economic Commentary

The economic trifecta has come and gone.  Though the markets are likely to continue to react to the news, we are here to report the results of our three big economic events.  First the government released the initial measure of economic growth for the second quarter of the year. The Gross Domestic Product (GDP) is estimated to have grown by 3.0% for the quarter, a rebound from the negative first quarter. If this number holds up through two revisions, this means that the economy is showing a 1.75% growth rate for the first half of the year.  It is hard to assess how strong the economy is with businesses reacting to tariff warnings and implementations, which are changing the import numbers significantly.

How did the Federal Reserve react to the rebound on the very same day? The Fed concluded their meeting with an announcement that short-term rates will remain the same, which was not unexpected.  In the announcement accompanying their decision, the Fed indicated that they continue to weigh the potential effects of tariffs on inflation. There was also another measure of inflation which was released last week after the Fed concluded their meeting.  The PCE Inflation Index indicated that expenditure inflation rose 0.3% last month and 2.8% year-over-year, higher than the Fed’s 2.0% target. Personal spending rose 0.3% as well.  

Finally, Friday’s employment report provided the third leg of the trifecta. The economy added 73,000 jobs last month and the past two months were revised downward by a huge 258,000 jobs.  The unemployment rate remained at 4.2%.  Wage inflation increased 0.3% from last month and 3.9% year-over-year.  Overall, this report was much weaker than forecasted. Could the Fed’s decision been different if they had access to these numbers before their meeting? On the other hand, it looks like the inflation battle continues.

Weekly Interest Rate Overview

The Markets. Mortgage rates continued to remain in the same range, despite the influx of economic news in the past week. That is, until rates headed lower after the jobs report was released on Friday  According to the Freddie Mac weekly survey, 30-year fixed rates eased to 6.72% from 6.74% the previous week. In addition, 15-year loans decreased to 5.85%. A year ago, 30-year fixed rates averaged 6.73%, virtually the same as today. Attributed to Freddie Mac: “The 30-year fixed-rate mortgage showed little movement, remaining within the same narrow range for the fourth consecutive week. Continued economic growth, along with moderating house prices and rising inventory, bodes well for buyers and sellers alike.” 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

Home buyers wishing for lower mortgage interest rates may eventually get their wish, but for now, they’ll have to decide whether it’s better to wait or jump into the market. Buyers remain highly sensitive to interest rates and when rates begin to fall, a wave of pent-up demand could be unleashed, potentially driving a surge in home sales. National Association of Realtors® economists say a 30-year fixed rate mortgage of 6% would make the median-priced home affordable for about 5.5 million more households—including 1.6 million renters. If rates were to hit that magic number, it’s likely that about 10%—or 550,000—of those additional households would buy a home over the next 12 or 18 months, according to new data from NAR.  Seven million more jobs have been added to the U.S. economy since COVID, and wages have risen. “[Although] many people are waiting for mortgage rates to go down to make it more affordable to get into the market,” NAR Chief Economist Lawrence Yun said, “buyer demand can quickly change depending on how the mortgage rate changes.”   Buyers who are holding out for lower mortgage rates may be missing a key opening in the market. Following years of declines, housing inventories are finally rising across the country, giving once inventory-starved metros more options for prospective buyers. Nationally, inventory of existing homes was up 20% in May compared to a year earlier—but some markets saw even sharper increases, with inventory levels up as much as 80% annually, Yun said. As a result, home shoppers may find they have more bargaining power than in recent years. Source: NAR

Baby boomers are skipping the market and handing real estate straight to family, reshaping how homes are bought, sold, and inherited in 2025. Property Expert explores the top US states seeing this “quiet handoff” trend. The housing market is undergoing a subtle but powerful shift this year: more homes are changing hands within families. Whether through inheritances, early transfers, or rent-free living arrangements, baby boomers are passing property directly to children and grandchildren, bypassing traditional sales channels. According to new housing and demographic data by Deeds.com, states like Arizona, Florida, and Texas are leading the surge in intergenerational real estate transfers. In some zip codes, up to 1 in 4 property transitions are now family-to-family, a 68% increase from pre-2020 levels.  For young adults priced out of the open market, these off-market transfers are often the only affordable path to homeownership. But they also reduce inventory for traditional buyers, complicating an already tight housing landscape.  Why are these taking place?  Many want to “give while living,” passing homes to heirs before death to avoid probate delays and tax complications. In addition, young adults simply can’t afford to buy, and older owners don’t want to sell to strangers, especially when family needs a place to live.  As the Great Wealth Transfer accelerates, homes, not just money, are becoming the new currency of intergenerational support. While these off-market moves offer relief to younger family members, they also reduce visible housing inventory and shift how we define ownership and opportunity. Whether you’re planning to gift property or hoping to buy your first home, understanding this trend is essential. The future of real estate may be more private, more personal, and more dependent on family ties than ever before. Source: KDAF

One-third (33.5%) of baby boomers who own their home say they’ll never sell, according to a recent Redfin-commissioned survey. Another 30% say they’ll sell their home at some point, but not within the next decade.  Older people are even less likely to sell, with nearly half (44.6%) of Silent Generation members never planning to sell.  Younger homeowners are more likely to eventually part ways with their house: 25% of Gen Xers and 21% of millennial/Gen Zers say they’ll never sell.  There are several financial and lifestyle reasons why older Americans are much more likely than younger Americans to stay put. Many baby boomers who own their home don’t have a financial incentive to sell. Additionally, many older homeowners have lived in their home for a long time and simply prefer to stay put; roughly two-thirds (67%) of baby boomer homeowners have lived in their home for 16-plus years.  When asked in the survey why they’re staying in their current home, most baby boomers (55%) said they just like their home and have no reason to move, making that the most commonly cited reason. The next most common reasons are financial: 30% said their home is almost or completely paid off, 16% said today’s home prices are too high, and 8% don’t want to give up their low mortgage rate.  Source: MortgagePoint