By Mike Bodeen · 9 June 2025
Will 7% Become the New Mortgage Rate Sweet Spot?
Active listings at May’s end continued increasing though much slower. Under Contract listings dropped noticeably, down 4.7% from one year ago and down 12% from last month. Sales shrunk 6.6% from one year ago and 3.2% from last month. The average and median re-sale home prices had gains, though negligible. (.8% and 1.1%) respectively. New home sales prices jumped 7% over April. (Caveat: New home sold prices, like resale sold prices, don’t subtract the number of concessions the builder gives to a buyer – which they do, effectively lowering the price)
Active Listings: 26,580 vs 18,044 last year – up 47% – and up 1.5% from 26,190 last month
Under Contract Listings: 7,936 vs 8,324 last year – down 4.7% – and down 12% from 9,047 last month
Monthly Sales: 7,095 vs 7,597 last year – down 6.6% – and down 3.2% from 7,326 last month
Monthly Average Sales Price per Sq. Ft.: $300.14 vs $297.82 last year – up 0.8% – and up 0.3% from $299.34 last month
Monthly Median Sales Price: $455,000 vs $450,000 last year – up 1.1% – and up 2.2% from $445,000 last month
There were 1,499 new homes closed, down 4.6% from 1,572 in May 2024 and down 6.8% from April. The new home median sales price was $520,000, down 0.1% from May 2024 and up 7.2% from April.
The average lease price per square foot (PSF) rose to $1.37 increasing to a 3-Year average from $1.35 to $1.36 (See story below)
As always, thank you Cromford Report for your amazing stats!
Rental price reporting, like sales prices, can gyrate month to month, however, rental prices have remained consistently high for 3-Plus years. The monthly average lease price Per Square Foot (PSF) had remained steady at $1.35 PSF averaged over 3+ years. (See Chart above) This changed last month. The monthly rate was $1.37 which now moved the long-term rate up to $1.36
That may not seem like big news, but when you’re considering the long-term average, it speaks of an upward trend. There’s a very real possibility that these rental numbers will continue to trend upward. Why is that? Increased expenses. When a landlord’s normally consistent expenses run higher, they are typically passed onto tenants.
“What is that mortgage rate sweet spot? At this point, I think it will be 6% – maybe 6.5% or less. Believe it or not, it’s possible that 7% is.”
One of the reasons that rents have remained stable these past 3 years is because of the ginormous (yes, Virginia, it is a word – at least per Merriam-Webster) rent increases from January 2020 ($1.00 PSF) till January 2022 ($1.35), a 35% increase in 3 years, or nearly 12% per year. Landlords did VERY well during those years and were willing to absorb some added expenses, but that tide may be moving back out. Insurance, property taxes, and the higher overall cost of repairs and maintenance force landlords to recover those costs.
More on Mortgages
When mortgage rates connect with the “rate sweet spot” and renters become buyers, demand for rentals could decrease, thereby increasing rental supply, which could lower rent pricing. As it stands now, sales and rentals remain stagnant, mimicking the inert 7% mortgage rates.
What is that mortgage rate sweet spot? At this point, I think it will be 6% – maybe 6.5% or less. Believe it or not, it’s possible that 7% is.
Mike, how can that be considering our slow 7% market isn’t doing the trick? Not surprisingly, people tend to get used to repetition. Plus, life events force us to make choices now: Births, marriages, divorce, debt and death don’t wait for 5% or 6% mortgage rates. Remember, the average mortgage rate in the U.S., since 2000 is 7.75%.
Remember this too from the Cromford Report founder: There is no likelihood of us seeing 3% or even 4% for a 30-year fixed loan in the medium term.
Let’s get real.
Mike Bodeen
Market data referenced in this article comes from The Cromford Report.