Time flies, and 2025 is already half over. Brokers know that in the real estate market, and therefore lending, buyer and seller psychology matters. As we enter the second half of the year, economic uncertainty persists, driven by inflation concerns and the impact of tariffs. For some good news, May’s inflation data came in lower than expected, as tariffs have yet to show a significant impact. The90-day tariff pause ends next month, though an extension is possible. President Trump indicated an extension may not be necessary, citing ongoing trade negotiations. What else is going on that brokers should be aware of that may impact your client’s state of mind, or the economy in general?

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The U.S. Federal Reserve is holding off on rate cuts for now, as it evaluates broader economic impacts, with meetings scheduled for both July and September. In terms of people’s state of mind, Wall Street posted its best week since mid-May, which helps. Moreover, the benchmark S&P 500 index (SP500) notched a new intra day peak and record close for the first time since February. The Nasdaq Composite also achieved both those milestones for the first time since December last year. This news doesn’t directly impact mortgage rates, but they help the mood.

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The sentiment was driven by the supposed end of a 12-day conflict between Israel and Iran, which drove down oil prices and tamed inflation fears. After hovering near record levels on Thursday, the final push for stocks came on Friday following the finalization of a trade agreement between the U.S. and China under which tariff rates will come down, and rare earth exports will be expedited.

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In housing, April saw the widest gap between sellers and buyers since 2013, with 1.9million sellers and 1.5 million buyers, signaling a potential shift toward a buyer’s market. But affordability remains a challenge due to high mortgage rates and home prices. So yes, inventory is up 20 percent year over year so far in 2025, but affordability remains a challenge.

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Households earning $75k can afford just 21 percent of listings. In 2019, the same group could afford 49 percent of listings. With median household income at $80.6k(2023 Census), the gap between home prices and what many can afford continues to widen, pressuring the market to offer more accessible options.

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The economic news, as usual, has been mixed. The news last week that attracted the most attention was the third estimate of U.S. Q1 GDP growth (which was revised lower),and a slightly hotter-than-expected core personal consumption expenditures price index reading. Also of note, Federal Reserve Chair Jerome Powell gave his semiannual monetary policy report to Congress, where he stuck to a wait-and-see approach and did not echo Governors Michelle Bowman and Christopher Waller’s recent speculation that rate cuts may come as soon as the July Fed meeting.

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Orion’s broker clients should remember that no one can accurately predict what interest rates will do, and when. Our AEs don’t pretend to be able to do that and instead focus on providing brokers with solid service and a wide variety of loan products to help. Ask!