Mortgage rates may keep climbing in June, continuing an unsteady upward march that began after higher tariffs were announced in April.
Whether or not the tariffs remain in place pending judicial appeals, they affected interest rates in April and May. The 30-year fixed-rate mortgage has remained above 6.75% since the middle of April, and many buyers are bumping against their limits of affordability. In much of the country, home prices are rising more slowly than a year ago. In some markets, notably in Texas and Florida, home prices are falling.
Long-term interest rates might trend upward for a while
Big economic factors are pushing long-term interest rates upward for the long haul, wrote Joseph Brusuelas, chief economist for RSM US, a consulting firm for medium-size businesses. In a post in the company’s The Real Economy blog, Brusuelas wrote that long-term interest rates such as 30-year Treasury bonds and mortgage rates are rising “as populist economics takes hold and globalization fades.”
He zeroed in on the widening difference between yields on 30-year bonds and 10-year bonds. That’s a sign, he wrote, “that the economy is set to grow faster, generate higher inflation and demand a higher policy rate from the Federal Reserve as long-term interest rates rise.”
In other words, don’t expect interest rates, including mortgage rates, to take a tumble anytime soon.
What other forecasters predict
Loan securitizer Fannie Mae predicts that mortgage rates will average 6.5% from April through June, and the Mortgage Bankers Association predicts that they will average 6.7%. The only way those forecasts can turn out correct is if rates drop decisively in June, because rates averaged 6.8% from April through May.
Fannie Mae and the MBA predict that mortgage rates will fall from June through the end of 2026. Isn’t it pretty to think so? But the homely truth is that rates have mostly been stuck above 6.75% since November. They’ve dipped below that level a couple of times but promptly bounced higher each time.
Fed will wait
Over at the Federal Reserve, uncertainty is the watchword. In his news conference after the central bank’s meeting in early May, Fed Chair Jerome Powell uttered the words “uncertain” and “uncertainty” eight times. He said the Fed is in standby mode to see whether the economy slips into recession, suffers persistent inflation, or both as a result of higher taxes on imported goods. Then it’ll figure out what to do.
“But we think right now, the appropriate thing to do is to wait and see how things evolve,” Powell said. “There’s so much uncertainty.”
The Federal Reserve‘s monetary policy committee meets June 17 and 18, and the markets are quite certain that the central bank will leave the short-term federal funds rate alone.
What’s up (and down) with prices
Nationwide, house prices rose 4% from the first quarter of 2024 through the first quarter of 2025, according to the Federal Housing Finance Agency’s house price index. This marked a significant slowdown: Prices went up 6.8% from the first quarter of 2023 to the first quarter of 2024.
Of the 100 biggest housing markets, the fastest price appreciation was in Newark, New Jersey, up 11.6%. Prices rose by double-digit percentages in two other markets: Detroit and Providence, Rhode Island.
The market with the biggest drop was Lakeland-Winter Haven, Florida, where the average price fell 9%. Prices fell year-over-year in 11 markets — seven in Florida, two in Texas and one each in Louisiana and California (New Orleans and San Francisco).
Another house price gauge,the S&P CoreLogic Case-Shiller Index, also found that home price increases have slowed down. The company cited “a broad cooling trend” in home prices in the second half of 2024 that continued into the beginning of this year’s spring homebuying season.
In a nutshell, here’s an explanation of what’s happening with house prices: High mortgage rates are making it hard to afford to buy a home, so demand is down. But there’s long been a shortage of homes on the market. The restricted supply has put a floor under home prices in most of the country.
But there’s a drop-off in demand in Florida (led by disruption in the condo market), and in Texas, where abundant new construction competes with home resales. And everywhere, buyers struggle to find a home they can afford at today’s elevated interest rates. As homes linger on the market, unsold, more sellers are reducing their initial asking prices.
What I predicted for May, and what happened
At the end of April, I wrote: “Mortgage rates might pogo up and down in May. By the end of the month, they could rise due to tariff-related inflation or fall in response to a tariff-induced economic slowdown.”
Indeed, rates boing-boinged in small increments: down the first week, unchanged the next, up a little in each of the next three weeks. In Freddie Mac’s weekly survey, the average rate for the 30-year mortgage in May was 6.82%, up from 6.73% in April.
