Mortgage rates spike as the Fed turns hawkish

New sheriff in town

Kevin Warsh's first meeting as Fed Chair answered one question immediately: don't expect business as usual.

The Fed kept interest rates steady, as expected. But the real news was its outlook: flipping from projecting a cut to projecting a hike, with several Fed officials now eyeing more than one increase this year.

Warsh backed that up with changes to how the Fed communicates and operates, signaling that a new era is underway at the central bank.

We cover all this and more in today’s Blueprint. 

Let’s jump in.

- David

The Fed just flipped: a rate hike is now the base case

In today’s meeting, the Federal Reserve voted unanimously to keep rates unchanged at 3.5 to 3.75%. More importantly, it also signaled that at least one rate increase will happen this year. 

Here are the other key takeaways to know:

• The Fed got more hawkish –  Investors now expect at least one rate hike this year, with growing odds of a second as inflation remains above the Fed's target.

• Mortgage rates jumped – The average 30-year fixed mortgage rate surged 0.08 percentage points following the Fed announcement, one of the largest one-day increases in recent months.

• Warsh drew a line on inflation – In his first press conference as Fed chair, Kevin Warsh emphasized that the Fed will "deliver on price stability," signaling that fighting inflation remains the central priority.

• The Fed is changing how it communicates – Warsh said the Fed will issue shorter statements and move away from extensive forward guidance, giving markets less insight into its plans.

• Broader changes are coming – Warsh announced five task forces to review how the Fed operates, with recommendations expected before a broader overhaul of the institution in 2027.

My take

The real story today isn't that the Fed held rates steady — everyone expected that. It's that the conversation has shifted from when will the Fed cut rates to when will it raise them. The new Fed Chair made his priorities clear: inflation comes first, and transparency comes second. It isn’t eliminating future guidance, but it is reducing it. For housing, that's a double hit — rates stay high on the inflation signal, and a new layer of uncertainty gets baked in because markets can no longer read the Fed's next move as easily. Don't expect a return to the sub-6% mortgage-rate environment anytime soon. Agents have a real job to do here: not just delivering that reality once, but reinforcing it repeatedly until it actually lands with clients.

Metros with the highest cancellation rates

In May, 13.6% of home-purchase agreements fell out of contract nationwide. While that figure has remained unchanged for four straight months, it is still much higher than the levels seen during the 2020–2022 housing boom. 

Redfin found that cancellations are most common in many of the nation's strongest buyer markets, where rising inventory and increased competition among sellers have given buyers more leverage. 

Texas and Florida accounted for seven of the 10 metros with the highest cancellation rates.

Here are the metros with the highest cancellation rates:

1. Atlanta, GA: 18.8%

2. Fort Worth, TX: 18.1%

3. Jacksonville, FL: 17.9%

4. San Antonio, TX: 17.8%

5. Orlando, FL: 17.7%

6. Phoenix, AZ: 17.6%

7. Tampa, FL: 17.1%

8. Dallas, TX: 17.0%

9. Detroit, MI: 17.0%

10. Houston, TX: 16.9%

My take

Contract cancellations are one of the cleanest real-time signals of who holds power in a housing market. When buyers feel pressured to compete, they tend to stick with a deal. When they have options, they're more willing to walk away. The concentration of cancellations in markets like Texas and Florida suggests that buyers are becoming more selective as inventory rises. For agents, it's a reminder that getting a property under contract is no longer the finish line. Pricing correctly, managing expectations, and keeping both sides engaged through closing matter more in today's market than they did just a few years ago.

The most expensive home sales in May

The broader housing market may be moving at a slower pace, but luxury buyers are still writing enormous checks. 

May’s most expensive home sales were led by a $75 million Boca Raton estate, and every property on this list sold for at least $30 million. 

Florida dominated the rankings, claiming five of the top 10 sales and highlighting the continued strength of the state's luxury market.

Here are the most expensive U.S. home sales in May:

1. 2500 E Maya Palm Dr., Boca Raton, FL 33432: Sold for $75 million 

2. 820 S Ocean Blvd., Manalapan, FL 33462: Sold for $62.5 million 

3. 614 Tarpon Way, Palm Beach, FL 33480: Sold for $37.1 million 

4. 645 Willoughby Way, Aspen, CO 81611: Sold for $37 million 

5. 1192 Hwy 50, Glenbrook, NV 89413: Sold for $36.8 million 

6. 50 W 66th Unit 56N, New York, NY 10023: Sold for $35.5 million 

7. 50 W 66th Unit 53N, New York, NY 10023: Sold for $35 million 

8. 27910 Pacific Coast Hwy., Malibu, CA 90265: Sold for $35 million 

9. 1745 W 24th St., Miami Beach, FL 33140: Sold for $34 million 

10. 6000 N. Bay Rd., Miami Beach, FL 33140: Sold for $31.6 million

My take

Florida’s dominance on this list is no accident. The state continues to attract wealthy buyers with its favorable tax environment, waterfront lifestyle, and growing concentration of ultra-high-net-worth residents. The luxury market in West Palm Beach has been booming, fueled by an influx of billionaires relocating from other parts of the country. For luxury agents, the message is clear: demand at the top of the market remains exceptionally strong.

Schematics

The news that just missed the cut

• Know your competition: How one seller used AI to sell her condo

• How to stop losing listing appointments to agents who charge less 

• California home insurance prices set to spike in 2026 – the highest in the nation

• What AI still can’t do in a real estate transaction

• These are the best and worst states for affordability and homebuilding in 2026

Foundation Plans

Advice from David to win the day

The summer market is in full swing now. So today, as part of our Keep Your Eye on the Ball series, we’re highlighting key skills we think every agent needs to walk into any listing appointment with confidence.   

Know your potential client – Before you go into your appointment with a potential client, research them. Your goal isn’t to snoop on them, but to get a sense of who they are and what their motivations might be. Use resources like LexisNexis or TLO. If you can’t access them, use LinkedIn, Google, and social media platforms. Here are questions to guide your research:

• When did they purchase their current home?

• Do they have children?

• Are they planning on moving?

• What do they do for work? Has anything changed, causing them to sell?

Know the property – Look at all the previous sales of the home. Who was the builder? When was it built? Have there been any renovations? How old is the neighborhood? What is it like? All of these answers will help you value the home and set expectations for your potential clients. It’ll also make a great impression. You’ll show you’ve done your homework. 

Know the overall market trends – It’s not enough just to research the subject property; you need to know how the market trends are affecting this property. Research the answers to these questions:

• What are the days on the market to sell? Are they going up or down?

• Are there more homes on the market now than, say, 3 months ago?

• Are the pending home sales up or down?

We truly believe that if you put these tips into practice, you’ll confidently crush your next listing appointment. We’ll continue in our next edition, but in the meantime, start here and here to learn more.

Just in Case

Keep the latest industry data in your back pocket with today’s mortgage rates:

“You’ve gotta keep control of your time, and you can’t unless you say no. You can’t let people set your agenda in life.” — Warren Buffett

Don’t let events or other people set your agenda. Stay ruthlessly focused on your goals — your time is limited, and you only get one life. Make the most of it.

Have a wonderful week. We’ll see you back here on Friday!

- David