Mortgage rates tapped the pause button in the week ending Sept. 5. They’ve fallen more than a percentage point in the last four months, and lots of people are waiting for them to drop even more before they press play.
The average 30-year fixed-rate mortgage was unchanged from the previous week, averaging 6.27%. A basis point is one one-hundredth of a percentage point. Mortgage rates hardly moved because it was a short week without much market-moving economic data. The week’s average was calculated a day before the release of the August employment report.
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Rates have fallen a lot since May
In the first week of May, the average rate on the 30-year mortgage stood at 7.32% — a little more than a percentage point higher than it was this week, just four months later. The timing is unfortunate: The traditional homebuying season runs from May through August, and it began with rates north of 7%.
Rates at the beginning of homebuying season were too high for potential buyers who were already struggling to find places they could afford. So even as mortgage rates finally dropped below 7% in June and kept falling, purchasing activity was lackluster.
Home sales take a dirt nap
How lifeless was the housing market this summer? Compare two existing home sales reports, five years apart. In July 2019, homes were resold at a 5.43 million annual rate, according to the National Association of Realtors. In July 2024, the sales rate was 3.95 million — 27% lower.
The housing market is glacial because sellers have cold feet and buyers are slow-walking. According to a Realtor.com analysis of August sales, “the housing market slowed considerably as both buyers and sellers patiently wait for a lower mortgage rate environment.”
“Sellers are increasingly showing patience and modesty” as they keep their houses on the market and reduce asking prices when they don’t sell quickly, the Realtor.com analysis continues. Meanwhile, “it’s likely that some potential buyers are sidelining themselves until rates come down further.”
Forecasters from Fannie Mae and the Mortgage Bankers Association expect mortgage rates to be roughly half a percentage point lower in the second quarter of 2025. That could be music to the ears of both sellers and buyers in next year’s homebuying season.
