Mortgage Rates Tumble to 6.35%, Infusing ‘Much Needed Energy’ Into the Market

Mortgage rates continued to fall this week, with the average rate for a 30-year fixed home loan going from 6.46% last week to 6.35% for the week ending Aug. 29, according to Freddie Mac.

“Mortgage rates fell again this week due to expectations of a Fed rate cut,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “Rates are expected to continue their decline and while potential homebuyers are watching closely, a rebound in purchase activity remains elusive until we see further declines.”

The summer housing market has been lackluster up to now, according to Realtor.com® senior economic research analyst Hannah Jones in a recent analysis. However, things might soon turn around.

“Falling mortgage rates have infused some much needed energy in the market,” says Jones. “Buyers may be eager to take advantage of the lowest mortgage rates in over a year and secure a home before the fall.”

Will the market find its way out of its summer slump? Here’s a snapshot of the latest housing market data and what it means for homebuyers and sellers in the latest installment of our “Weekly Housing Market Update.”

Mortgage rate news

The Federal Reserve’s September policy meeting is quickly approaching—as is the promise of a rate cut for the first time in more than a year.

“The time has come for policy to adjust,” said Federal Reserve Chair Jerome Powell last Friday.

While the Fed doesn’t set mortgage rates, the two numbers often move in the same direction—and a rate cut next month is now “all but guaranteed,” according to Realtor.com senior economist Ralph McLaughlin.

Yet this doesn’t mean that rates will take a significant nosedive.

“We shouldn’t expect much downward movement in mortgage rates unless worse-than-expected economic indicators suggest the market is headed for anything but a soft landing,” says McLaughlin.

In a recent Realtor.com midyear housing forecast update, our year-end mortgage rate expectations were revised to 6.3%.

While homebuyers may be somewhat disappointed that rates might not fall much further in 2024, borrowers can lower their mortgage rate by up to 150 basis points “simply by shopping around, improving their credit score, increasing their down payment, and paying off existing debt,” says McLaughlin.

Basis points are a way to measure small changes in rates. For example, if mortgage rates drop by 25 basis points, they decrease by 0.25%.

Home prices continue to fall

Median home prices are down 0.2% for the week ending Aug. 24 compared with the same time last year.

This marks 13 weeks in a row where the median list price in the U.S. was less than or equal to what it was a year ago. (In July 2024, the national median list price was $439,950.)

Indeed, buyers and sellers have seen a consistent moderation in prices since the beginning of June, with some buyers benefiting from sellers slashing list prices.

“Year to date, the share of listings with price reductions has been more in line with pre-pandemic levels than the past several years as sellers adjust asking prices to better meet what buyers are looking for,” says Jones.

Housing stock is up

The total number of houses for sale increased by 33.6% for the week ending Aug. 24 compared to last year, marking a whopping 42-week growth streak.

Indeed, this bump in homes for sale translates into the largest number of active listings on the market since May 2020.

“Homes are no longer flying off the shelves like they did during the pandemic as buyers struggle to find what they are looking for at a price they can afford,” says Jones.

Meanwhile, fresh listings ticked up just 2.2% for the week ending Aug. 24 year over year.

Despite rates finally starting to go in the right direction, “lackluster buyer demand and still-high mortgage rates mean many homeowners have been rather reluctant to sell of late,” says Jones. “We expect mortgage rates to continue to ease through the rest of the year, which could help to ‘unlock’ seller activity.”

The market’s pace decelerated

Buyers finally have some breathing room when it comes to making an offer on a home.

For the week ending Aug. 24, homes spent eight more days on the market than the same time a year prior, marking the most significant annual increase in time on the market since July 2023.

“Time on market slowed to February’s level this week, emphasizing this summer’s moseying pace,” says Jones. (The typical home spent a whopping 50 days on the market in July.)

That means sellers will likely continue to adjust prices to see some movement in their listings, which is great news for homebuyers who have long waited for the market to change.

The uptick in time on the market creates “more time and space for buyers to get their ducks in a row,” says Jones.