Trump’s tariff announcements sent the bond market into its worst tailspin since 1981 but have stabilized with mortgage rates about 7%. The housing market is living in what SitusAMC aptly calls a “snow globe” of uncertainty, with foreign investors eyeing the exit on MBS holdings and DOGE taking a bite out of federal agencies faster than you can say “government waste.” CMBS delinquencies are rising and office buildings are still clearing despite back to office mandates for many. Let’s get you caught up and out the door in three minutes. Tim

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Key Takeaways

• Home values up 2.6% YoY to $357,138 with experts predicting 1.3-3.5% growth in 2025 despite affordability challenges. 1
• Mortgage rates surged to 7.1% on April 11, highest since mid-February, as bond yields experienced their worst week since 1981 due to Trump’s tariff policies. 2
• Foreign investors reducing MBS holdings with China’s positions down 8.7% YoY, potentially putting additional upward pressure on mortgage rates. 3
• DOGE cuts at Freddie Mac include elimination of $9 million in diversity, equity and inclusion spending according to FHFA Director Bill Pulte. 4
• Economic uncertainty near record levels with the Index on US Economic Policy Uncertainty reaching the second-highest level on record, just behind COVID-19. 5
• FHFA workforce reduced by 25% with Director Pulte stating they’re “consolidating divisions to focus on building more homes and strengthening safety and soundness.” 4

Residential Real Estate Markets

The housing market continues to show resilience despite affordability challenges. Home prices are maintaining their upward trajectory with moderate growth, constrained by limited inventory and elevated mortgage rates. Experts predict continued price increases between 1.3% and 3.5% for 2025.

• Average U.S. home value: $357,138, up 2.6% year-over-year according to Zillow. 1
• Housing supply shortage persists with the U.S. 4.5 million homes short of a healthy housing supply according to Zillow analysis. 1
• Shelter costs increased 0.2% month-over-month and 4.0% in the past 12 months, the smallest 12-month increase since November 2021. 6
• Cotality forecasts 4.2% price growth by February 2026, following a 2.9% increase from February 2024 to February 2025. 6
• Consumer sentiment remains negative with Fannie Mae’s Home Purchase Sentiment Index decreasing by 3.5 points in March and 77% of consumers saying now is a bad time to buy. 6

Mortgage Markets

Mortgage markets have experienced extraordinary volatility in April 2025, primarily driven by President Trump’s tariff policies. Rates surged to 7.1% on April 11, marking the highest level since mid-February. Foreign investors, particularly China, have begun reducing their holdings of U.S. mortgage-backed securities, adding further pressure to the market.

• 30-year fixed mortgage rate: 7.1% as of April 11, up 13 basis points in a single day. 2
• Bond market experienced “worst week since 1981” in terms of the jump in 10-year yields according to Matthew Graham, COO at Mortgage News Daily. 2
• Foreign governments hold $1.32 trillion of U.S. MBS as of January, representing 15% of all outstanding securities. 3
• China’s MBS holdings down 20% by early December, with Japan following a similar trend of reducing exposure. 3
• Potential for 10% mortgage rates according to Laurence Kotlikoff, professor of economics at Boston University, due to market uncertainty and inflation risks. 7
• MBA forecasts “mixed impact” on mortgage markets from current economic conditions, with rates having declined from over 7% in January to as low as 6.5% in February before recent increases. 7

Economic & Political

President Trump’s tariff policies have created economic uncertainty, with the Index on US Economic Policy Uncertainty reaching near-record levels. The Department of Government Efficiency (DOGE) has implemented significant changes across federal agencies, including a 25% workforce reduction at the FHFA. These policy shifts are reshaping the housing finance landscape.

• 10% tariff imposed on all U.S. imports starting April 5, with higher rates for certain countries beginning April 9. 5
• Country-specific additional tariffs: China (34%), Canada/Mexico (25%), EU (20%), Japan (24%), UK (10%). 5
• Stock market impact: Dow Jones down 2,000 points, S&P Index down 6%, and Nasdaq down almost 6% in the week following tariff announcements. 8 7
• FHFA workforce reduced by 25% according to Director Bill Pulte, exceeding DOGE’s expectations. 4
• $9 million in DEI spending eliminated at Freddie Mac and $6.4 million in “climate and DEI” spending cut at Fannie Mae according to Pulte. 4
• MBA’s Broeksmit notes that “Elon Musk’s department of government efficiency is certainly living up to its mission of moving fast and breaking things.” 9

News

Freddie Mac DOGE Cuts Are Real

The Department of Government Efficiency’s impact on Freddie Mac has become increasingly apparent with significant cuts being implemented. FHFA Director Bill Pulte has eliminated $9 million in diversity, equity, and inclusion spending at the GSE. These changes are part of a broader transformation of housing-related federal agencies under the Trump administration.

• $9 million in DEI spending eliminated at Freddie Mac as part of the administration’s broader cost-cutting initiatives. 10
• MBA willing “to work with policy makers” to ensure that the transition to close the conservatorship era of the GSEs is handled with precision. 9
• Broader transformation underway across housing-related federal agencies including staff reductions, regulatory changes, and policy shifts at the CFPB, HUD, and FHFA. 10

Living in the Snow Globe: How Trump’s Policies Are Shaking Out

The Trump administration’s policies have created a state of significant economic uncertainty, likened to “living in a snow globe” by SitusAMC. The Index on US Economic Policy Uncertainty has reached the second-highest level on record, just behind COVID-19. The combination of tariffs, immigration changes, and federal workforce cuts has created a highly unpredictable environment for real estate markets.

• Economic Policy Uncertainty Index at second-highest level on record, 89% higher than at the beginning of the year. 5
• Uncertainty about tariff permanence as it remains unclear whether they are a long-term policy or a negotiation tactic. 5
• Recession or stagflation risk increased according to most economists due to the combination of policy changes. 5
• Multiple policy changes creating opposing effects on economic growth and inflation, including tariffs, immigration changes, federal workforce cuts, and return-to-office mandates. 5

Foreign Investors Selling MBS Could Further Spook the Mortgage Market

Foreign governments are reducing their holdings of U.S. mortgage-backed securities, posing a significant risk to the mortgage market. China’s MBS holdings are down 8.7% year-over-year, with Japan following a similar trend. If this trend accelerates, mortgage rates could rise further, exacerbating affordability challenges in the housing market.

• Foreign governments hold $1.32 trillion of U.S. MBS as of January, representing 15% of all outstanding securities. 3
• China’s MBS holdings down 8.7% YoY by the end of September, and down 20% by early December. 3
• Japan shifting from growth to contraction in its MBS positions in late 2023. 3
• Potential for widening spreads between Treasury yields and MBS yields if foreign selling accelerates, leading to even higher mortgage rates. 3
• BTIG analyst Eric Hagen warns that mortgage spreads would likely widen in response to China, Japan or Canada selling with “a retaliatory objective.” 3

Commercial Real Estate Markets (including Multifamily)

Commercial real estate markets are facing significant challenges in April 2025, with rising delinquency rates and ongoing concerns about office properties. The CMBS delinquency rate increased to 6.65% in March, while the special servicing rate retreated slightly to 10.11%. Multifamily investors continue to grapple with higher interest rates and operating expenses in an uncertain economic environment.

• CMBS delinquency rate increased 35 basis points to 6.65% in March 2025, with the overall delinquent balance rising from $36.0 billion to $39.3 billion. 11
• Special servicing rate retreated 21 basis points to 10.11% in March, after surging 45 basis points the month prior, driven by improvements in office and multifamily sectors. 11
• CMBS loan losses pulled back in February with $79.7 million across 14 loans resolved with $38.2 million in total losses, representing an average loss severity of 47.87%. 12
• GSA-leased office space reduced by 8.5 million square feet across 109 fewer properties as of February 2025, cutting annual rent by more than $318.5 million as part of DOGE efficiency measures. 13
• Multifamily investors facing challenging environment due to higher interest rates, operating expenses, and rental rate declines in many markets, according to Danny van der Reis, EVP at Arbor Realty Trust. 14
• Technology transforming multifamily investment with increased reliance on predictive analytics and real-time data to assess market trends, rental income potential, and asset valuations. 14
• MBA hosting School of Multifamily Property Inspections from April 14-24, designed to help originators, asset managers, underwriters, and servicers better understand property conditions and inspection processes. 15
• International trade policy affecting CRE markets with tariff rates near historical highs, creating uncertainty despite the April 9 announcement of a 90-day pause on major tariff increases. 16