Housing Market Update | Week of August 18th
Published: August 18, 2025
Updated: August 18, 2025

Housing Market Update | Week of August 18th

Last week, mortgage rates dropped to a new yearly low despite hotter-than-expected inflation data from July’s CPI and PPI reports. This is thanks to improved mortgage spreads, which is the percentage difference between 10-year treasury yields and the average interest rate on a 30-year fixed mortgage. We’ll explain the reason for these improved spreads in a bit.
Looking ahead, all eyes will be on the various members of the Federal Reserve speaking throughout the week. Remarks from Vice Chair Michelle Bowman, Atlanta Fed President Raphael Bostic, and Fed Governor Christopher Waller will precede Fed Chairman Jerome Powell’s speech at the annual Economic Policy Symposium in Jackson Hole, Wyoming, on Friday.
Markets will react to these speeches, especially if they share any insight into potential rate cuts or current sentiment regarding inflation and/or the labor market.

Last Week's Mortgage Rate Recap
Rates Were Steady
Mortgage rates reached a new low for 2025 last week before a slight rise back to where they started on Friday. The most significant pieces of economic news last week were the two inflation reports: the Consumer Price Index (CPI) and Producer Price Index (PPI). The former highlights prices of consumer goods, while the latter highlights the price of wholesale goods. Core CPI rose by 0.3% (as expected) and core PPI rose by 0.6% (significantly higher than expected).
Fortunately, stability in mortgage spreads prevented mortgage rates from rising in line with 10-year treasury yields, which started the week at 4.29% and ended the week at 4.33%. Mortgage spreads started to drop late last year following two Fed rate cuts and have continued to inch lower throughout the year. The biggest reason for these improved spreads is improved sentiment regarding the housing market. There’s still room for spreads to improve further, but it's worth noting that rates would be roughly 0.8% higher if spreads were as poor as they were at their peak in 2023.

This Week's Mortgage Rate Forecast
Rates Could Move Slightly
The upcoming week has limited economic data but plenty of rhetoric from Fed members. As we mentioned earlier, a Fed member will speak every day this week, with the most significant market mover being Powell’s speech at the Jackson Hole Economic Policy Symposium on Friday. Given the most recent labor and inflation reports, it will be interesting to see whether these Fed members will put more emphasis on last week's inflation numbers vs. the rapidly deteriorating labor market data.
Powell and other Fed members have maintained the stance of a dual mandate that targets inflation closer to 2% and an unemployment rate at or below 4%. They’ve also maintained that the labor data holds more weight in terms of rate cuts than inflation. So, with the combination of stagnant job growth since May and inflation rising again, the Fed’s perspectives will give us greater insight into expectations for rate cuts this year.
The market is constantly evolving, so if you have any questions regarding rates or specific products for any of your buyers, make sure to stay in touch with your UMortgage Loan Originator for timely updates and expert insight!