July 29, 2025 – The Trifecta Hits as the Month Comes to a Close

Economic Commentary

Every month we have important economic data releases and events.  But only a few times per year do we have the most important releases lined up during the same week.  Our definition of a trifecta is a week in which we have the first reading of economic growth for a quarter (Second Quarter GDP), a meeting of the Federal Reserve’s Open Market Committee (FOMC) and the jobs report (BLS Employment Situation). This week is trifecta week as all the stars have aligned to bring us all three events within three days.

Such a confluence of events would ordinarily bring the potential of volatility to the markets, and this trifecta is no exception. As a matter of fact, recent news has served to raise the stakes this time around. For example, there is unprecedented pressure from the Administration being placed on the Fed to act on lower rates, which is very unusual since the Fed acts as an independent agency. Add the fact that the first quarter showed negative economic growth, which means that a second quarter of negative growth would add to this pressure.

One area which has been a strong point for the economy for the past several years has been the creation of jobs. It is hard to envision a recession within an economy which is creating plenty of jobs. The jobs report will be released two days after the Fed meets, and the GDP report is released. Therefore, it will be hard to factor this data into the Fed’s decision.  Regardless of the results, this week will serve to be a very interesting period for the markets. Hang onto your hats!

Weekly Interest Rate Overview

The Markets. Mortgage rates moved slightly down in the past week as a big week of data and the Fed meeting approached next week. According to the Freddie Mac weekly survey, 30-year fixed rates eased one tick to 6.74% from 6.75% the previous week. In addition, 15-year loans decreased to 5.87%. A year ago, 30-year fixed rates averaged 6.78%, virtually the same as today. Attributed to Freddie Mac: “This week, the 30-year fixed-rate mortgage essentially remained flat at 6.74%. Overall, the backdrop for the housing market is positive as the economy continues to perform well with solid employment and income growth.” 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

The Federal Housing Finance Agency announced that Fannie Mae and Freddie Mac, will begin accepting VantageScore 4.0 for mortgage underwriting, either alongside or in place of traditional FICO credit scores. This change has the potential to provide potential homebuyers with an extra boost that can either qualify them for a mortgage or reduce the cost of the loan. VantageScore 4.0 is a newer model developed by the three major credit bureaus (Equifax, Experian and TransUnion) that analyzes changes in credit data over time and includes additional data points, such as rental, utility and telecom payments, in the credit report, rewarding borrowers for making timely payments. These data points have traditionally been excluded from credit reports. The National Association of REALTORS® praises the FHFA decision as a win for real estate professionals and consumers. The modernization of the credit scoring system will help borrowers, especially those with limited credit, to gain access to a competitive housing market. NAR Executive Vice President and Chief Advocacy Officer Shannon McGahn stated that “This is a major step toward a more accurate and equitable mortgage underwriting process, one that considers timely rent, utility and telecom payments as indicators of creditworthiness. These are real-world factors that show how people pay their bills and should count when determining if someone qualifies for a mortgage.”  Source: Realtor Magazine

America’s housing deficit grew to nearly 4.7 million homes in 2023, up 159,000 from the previous year. There were 1.4 million homes added in the U.S. in 2023, but 1.8 million new families formed. In 2023, only 3.4 million homes were vacant and available for either sale or rent. In, contrast, there were 8.1 million families sharing their homes with unrelated people–many of whom would probably seek out their own home if possible. In general, the U.S. has failed to build enough homes dating back to the Great Recession, and despite a construction surge during the COVID-19 pandemic, the gap persists. While the deficit grew by 159,000 homes in 2023, that is an improvement over 2022’s escalation of 257,000 homes. In 2022, 1.3 million new homes were built. Millennials are the largest chunk of people sharing homes with non-relatives. In 2023, they made up 38% of families living with nonrelatives, with Gen Z at 29%, Gen X at 17% and Baby Boomers at 16%.  Source: Zillow

Migration trends are reshaping real estate markets across the United States, with the South experiencing the most significant changes. As more people relocate to the region, the effects are being felt across the housing ecosystem — from buyers and sellers to investors and developers. By the end of 2024, the South had become the most populous region in the country, with nearly 132.7 million residents, according to the U.S. Census Bureau. Limited housing supply is driving up prices and fueling competitive markets, with homes frequently selling above asking price and in record time. While rising interest rates have been widely covered as a market influence, the added pressure from low inventory has compounded the challenges. It’s important to note that not all Southern markets are experiencing the same level of demand, however.  Some areas have become saturated, while others are seeing increased investor interest and development opportunities. In 2020, during the early stages of the pandemic, the country paused amid widespread uncertainty. Businesses — including those in the housing and mortgage sectors — froze operations. As remote work became viable, however, many Americans seized the opportunity to relocate. The South, with its warmer climate and lower cost of living, became a popular destination.  The region saw an increase of approximately 1.8 million people from 2023 to 2024 — a 1.4% rise, outpacing all other regions in both growth rate and total population gain. It was also the only U.S. region where more people moved in than out.  While baby boomers remain a key demographic in southern migration, millennials are exerting increasing influence on the housing market. Millennials were the largest generational group in the U.S. in 2023, with a population of approximately 72.1 million, according to Pew Charitable Trust. Born between 1981 and 1996, they recently surpassed baby boomers in size and will continue to play a dominant role in shaping demand.  Homeownership among millennials lags behind previous generations, however. According to MBS Highway, only about 45% of millennials currently own homes. By comparison, 48% of baby boomers owned homes at age 30, and 65% did by age 40. For 40-year-old millennials, the rate is just 55%. This homeownership gap reflects pent-up demand. Even though home prices remain elevated, millennials continue to search for affordability and value — making new construction an attractive option. Source: Scotsman Guide