Melissa
Cohn,
regional
vice
president
at

William
Raveis
Mortgage,
said
that
while
she
expects
the
Fed
to
stand
pat
this
week,
“the
surprise
could
be
in
the
latest
dot
plot
of
future
rate
expectations.”

In
December,
the
central
bank
projected
an
additional
50
bps
in
cuts
in
2025.

“If
the
dot
plot
reveals
expectations
for
more
rate
cuts
than
previously
expected,
it
is
possible
that
the
bond
market
could
rally
and
rates
move
down,”
Cohn
said.

Recession
fears
rising

The
recent
downward
movements
in
10-year
Treasury
yields
and
30-year
mortgage
rates
may
be
tied
to

fears
of
a
recession.
According
to
a
CNBC

survey
of
market
experts,
the
odds
of
a
U.S.
recession
this
year
are
at
36%,
up
from
23%
in
January.
The
average
GDP
growth
forecast
for
2025
among
these
respondents
shrank
from
2.4%
to
1.7%
during
the
same
two-month
period.

“The
big
unknown
here
is
whether,
at
some
point,
the
same
economic
uncertainty
that
is
currently
having
a
positive
impact
on
interest
rates
will
actually
cause
the
U.S.
economy
to
tip into
recession.
A
recession,
particularly
one
with
significant
job
losses,
could
cause
any
housing
recovery
to
fizzle
fairly
quickly,”
said
Marty
Green,
principal
at
mortgage
law
firm

Polunsky
Beitel
Green.

Tom
Egan,
chief
financial
officer
at
home
equity
investment
provider


Hometap,
said
this
week
that
conflicting
data
points
are
expected
to
drive
Fed
policymakers
“to
wait
for
more
clarity
before
acting.”
He
said
that
while
gross
domestic
product
(GDP)
and
employment
numbers
are
strong,
“volatile
equity
markets
and
lukewarm
consumer
sentiment”
along
with
uncertainty
driven
by


White
House
policies
make
it
more
difficult
to
project
a
path
toward
lower
rates.

“With
a
patient
Fed
and
a
growing
number
of
potential
speed
bumps
on
the
horizon
for
the
rest
of
the
year
—
geopolitical
conflict,
a
looming
debt
ceiling
battle,
volatile
administrative
directives,
and

seemingly
plateaued
inflation
—
we
expect
this
same
narrative
to
persist
until
the
impacts
of
recent
policy
changes
are
clearer
and
the
data
paint
a
more
consistent
picture,”
Egan
told
HousingWire
via
email.

Headline
inflation
slowed
in
February
to
2.8%
year
over
year
and
0.3%
month
over
month,
according
to
the

U.S.
Bureau
of
Labor
Statistics.
But
core
inflation,
which
excludes
volatile
food
and
energy
costs,
was
up
3.1%
year
over
year
and
is
still
above
the
Fed’s
2%
target.
Prices
could
accelerate
in
the
coming
months
due
to
the
impact
of
President
Donald
Trump’s
widespread

tariffs
against
key
trade
partners.

How
will
homebuyers
respond?

Green
said
that
housing
market
activity
at
the
start
of
the
traditionally
busy
spring
season
appears
“more
normal”
than
in
recent
years
due
to

higher
inventory
levels
and
lower
mortgage
rates.
But
like
Egan,
he
acknowledged
clouds
on
the
horizon
from
the
Trump
administration’s
policy
path.

“The
combination
of
prospective
government

cuts
by
DOGE
and
the
disruptive
impact
of
tariffs
have
made
the
mortgage
bond
market
begin
to
price
in
additional
cuts
by
the
Fed
later
in
2025,”
Green
said
in
written
commentary.
“The
wild
card,
however,
is
whether
the
tariffs
reignite
inflation,
making
further
Fed
cuts
more
complicated
as
it
tries
to
balance
its
dual
mandate
of
maximum
employment
and
price
stability.”

Home
sales
didn’t
start
the
year
on
a
positive
note.
January
data
from
the

National
Association
of
Realtors
shows
that

existing-home
sales
fell
4.9%
from
December
to
a
seasonally
adjusted
annual
rate
of
4.08
million.

New-home
sales
fared
even
worse
as
they
dropped
10.5%
on
a
monthly
basis
to
an
annual
rate
of
657,000,
according
to
the

U.S.
Census
Bureau
and

U.S.
Department
of
Housing
and
Urban
Development.
That
served
as
another
blow
to
homebuilders
who
are

particularly
worried
about
the
impact
of
tariffs
on
building
materials.

CoreLogic
Chief
Economist

Selma
Hepp
said
that
the
spring
home-purchase
season
should
benefit
from
the
recent
declines
in
mortgage
rates
while
adding
that
it’s
“unclear
how
long
the
retreat
will
last.”

“American
households
are
increasingly
concerned
with
potential
re-inflation,
their
job
security
and
financial
outlook,
which
is
holding
them
back
from
making
major
expenditures,”
Hepp
said.
“At
the
same
time,
many
are
still
catching
up
with
inflation
in
housing
and
related
services
of
the
last
few
years.”