Just as things were starting to look up for the housing market, President Donald Trump's trade war threw a wrench in the works.
The rate on a 30-year mortgage broke a six-week streak of declines last week, climbing the most since October. It tracked an increase in bond yields as investors showed their displeasure with Trump's widespread tariffs.
These movements translated to a decline in purchase volumes, which fell 5% week over week, according to data published Wednesday by the Mortgage Bankers Association.
In a matter of days, Washington's protectionist pivot sent government bond yields soaring to their highest level since early 2025 , suggesting that investors were dumping the asset in droves — either in protest of the Trump administration's tariffs or as a sign that the bond market was losing its safe haven status.
While bond market moves have since calmed, the housing repercussions have been widespread. Aside from falling purchase volumes, the MBA survey cited an 8.5% drop in mortgage applications and a 12% decline in refinancing volumes.
The homebuyers' recoil marks a sharp turnaround for what was a thawing market.
For months now, demand has been anemic amid high mortgage rates and a lack of supply, which kept housing prices up. The affordability crisis eventually wore down prospective buyers, translating into a 2025 housing cooldown .
But things began looking up when purchasing applications jumped to their highest level in two months just ahead of the tariff announcement.
With mortgage rates snapping the trend, buying appetite is unlikely to rebound quickly.
"Purchase volume remains almost 13% above last year's level, but economic uncertainty and the volatility in rates is likely to make at least some prospective buyers more hesitant to move forward with a purchase," Mike Fratantoni, MBA's chief economist, said in a press release.
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