US Economy SHRINKS: Why Mortgage Rates Aren’t Dropping (Yet) | Bigger Pockets Video

Episode #318

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The US economy is shrinking, with GDP declining this quarter. We’re getting closer to recession territory, so why aren’t mortgage rates dropping? We’ll explain how one crucial part of the economy is staying strong—keeping the Fed from cutting and delaying the typical rate-drop that comes with a recession. What’s stopping us from going back to sub-6% mortgage rates? We’ll break it down in this episode.

The economy is changing—fast. The US saw its GDP turn negative last quarter as many Americans braced for the impact of tariffs. But even with the overall economy lagging, labor data remains strong. Jobs are still being created, unemployment is relatively low, and Americans are going to work. This may be the single factor keeping the Fed in limbo, unable to cut rates any further. So, what happens if the labor market breaks?

Home builders were already anxious over the past year, and now they’re getting even more hesitant to build. With tariffs pushing up prices for materials, building (and buying) a house could get much more expensive. And with builders already dropping prices, could this lead to a broader decline in home prices across the nation?