Mortgage rates have reached their lowest level in more than a year, offering a glimmer of hope for homebuyers navigating the challenging housing market. As of the week ending October 23, the average 30-year fixed mortgage rate was down to 6.19%. That’s down from 6.27% a week earlier. This drop represents a welcome departure from the norm, as it gives some measure of relief to millions of Americans aggravated by persistently elevated borrowing costs.
In addition to benefitting from declining mortgage rates, home prices are beginning to soften in many of the United States’ largest metropolitan areas. New evidence in the form of existing home sales jumping at the highest rate in seven months in September suggests otherwise. People were buying books – sales skyrocketed in that month alone. Even more interesting is that the average home sold for 1.4% below asking price, evidence that buyers are starting to have more leverage on negotiations.
Lawrence Yun, chief economist at the National Association of Realtors (NAR), commented on the current market dynamics, stating, “As anticipated, falling mortgage rates are lifting home sales.” This sentiment is indicative of a larger national trend towards acknowledging the need to improve housing affordability. Lower borrowing costs and softer home prices are accelerating this trend.
Not only are borrowing rates in decline. As a result, a growing majority of economists predict an October rate cut by the Federal Reserve to be a “near certainty.” According to Zillow Home Loans senior economist Kara Ng, mortgage rates should continue to slightly fall through 2026. She grounds this prediction on signs of softening economic momentum and a worsening labor market.
Freddie Mac’s chief economist, Sam Khater, addressed the current situation, noting, “At the start of 2025, the 30-year fixed-rate mortgage surpassed 7%, while today it hovers nearly a full percentage point lower.” Mortgage rates have fallen precipitously. This has become one of the last major economic indicators to emerge during the now-unfolding government shutdown. This further underscores its significance in today’s economic landscape.
The September discount on home purchases was the largest since 2019, marking a notable shift after home prices spiked during the pandemic due to surging demand. What’s clear is that the housing market is trying to reset to today’s reality. Most economists agree that declining mortgage rates and a softening housing market will make homeownership more attainable for a wider range of people.