May 05 2025

Reef Daily

Reef Daily | May 05 2025

Housing Market Update

Latest Market Data (May 5, 2025) Two key economic reports were released this morning, both purchasing managers' indexes for the services sector which impact real estate markets. S&P's services PMI declined to 50.8 from 51.4 in March, indicating the slowest growth in 17 months. Chris Williamson, chief business economist at S&P Global, noted that "a worrying backstory is developing in the vastly larger services economy, where business activity and hiring have come closer to stalling in April amid plunging business confidence." Meanwhile, ISM's services index rose to 51.6% from 50.8%, showing some resilience in the sector despite ongoing challenges.

Mortgage Rates

Type	Today's Rate	Last Week's Rate
30-year fixed	6.78%	6.86%
15-year fixed	5.95%	6.08%
5/1 ARM	6.20%	6.09%

Mortgage rates went up from Friday morning, with each loan type gaining a few basis points on their averages. Today's market data, with expanding Treasury yields, likely points to upward pressure on interest rates in the short-term. Alternative data from Zillow shows the 30-year fixed rate at 6.70% (up 9 basis points), confirming the upward trend across reporting sources.

Future Forecasts The Federal Reserve is meeting this week, but analysts put the odds of a rate hold at around 97%, meaning mortgage rates are unlikely to fall significantly soon. Market participants currently expect the FOMC to also remain on hold at the June meeting, with the next rate cut possibly coming in July.

Notable Transactions

Commercial Highlights The Renaissance Office Center in Fort Myers, Florida, an 86,000-square-foot institutional-grade Class A office building, was acquired by CM-CRE Office I, LLLP for $9,675,000. The property, strategically positioned at the northwest corner of I-75 and Daniels Parkway, is recognized for its exceptional finishes, first-class amenities, and roster of nationally recognized, credit-rated tenants.

A three-story Fairfield office building at 383 Route 46 in New Jersey was sold for $3.6 million. The 34,445-square-foot property with its distinctive glass exterior design was purchased by Fairfield Real Estate LLC. The building sits at the intersection of Hollywood Avenue and Route 46 and features 90-plus on-site parking spaces.

Market Indicators

Buyer Demographics A household in the United States must now earn $114,000 annually to afford a median-priced home-marking a 70.1% increase from six years ago, according to the latest Realtor.com data. This figure assumes a 30-year fixed mortgage, a 20% down payment, and limits housing costs to 30% of gross monthly income. The required income now outpaces what many American households earn, exacerbating concerns around affordability and access to homeownership.

Regional Developments

With ongoing changes in the real estate landscape, Zillow and Redfin - two of the most popular platforms for home sale searches - announced new rules affecting private listings. Starting in late May, "coming soon" listings that are advertised on other real estate websites will need to be published to these platforms within one day or face restrictions. This policy change will impact how properties are marketed across different regions of the country, with potential implications for listing strategies in all major markets.

Sources

This newsletter is for informational purposes only and should not be considered as financial advice.