After months of being stuck around the 7 percent mark, mortgage rates are finally falling—but experts say it is going to be “an uneven journey” in the coming weeks.
The average weekly 30-year fixed mortgage rate was 6.35 percent as of August 29, according to the latest data from the Federal Home Loan Mortgage Corporation, better known as Freddie Mac, down from 6.46 percent a week earlier and 7.18 percent from the end of August 2023.
Homebuyers have long awaited mortgage rates to come down after they skyrocketed between 2022 and 2023 due to the Federal Reserve’s aggressive rate-hiking campaign. But experts said that they might not fall as quickly as many might wish for September, even if the Federal Reserve cuts interest rates as expected.
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The National Association of Realtors (NAR) expects the average 30-year mortgage rate to be 6.7 percent by the end of the year; the Mortgage Bankers Association predicts it will be 6.5 percent; and the Federal National Mortgage Association, better known as Fannie Mae, forecasts it will be 6.4 percent.
While mortgage rates are already technically below all these levels, experts think they might climb back, even if temporarily.
“Mortgage rates will bump around over the next few weeks, and I expect rates to be between 6.2 and 6.4 percent at the end of the year,” says Lisa Sturtevant, chief economist at Bright MLS.
“Mortgage rates will trend lower in September, but it will be an uneven journey,” Greg McBride, chief financial analyst at the New York City-based consumer financial services company, said in a recent report. “Economic data, such as a weak jobs report, would spur more movement in mortgage rates than any response to a long-expected Fed interest rate cut.”
Senior economic analyst at Bankrate Mark Hamrick notes this week’s monthly employment report will be the last before the Federal Reserve’s September 18 announcement on interest rates, when it’s expected to call for a rate cut.
“The post-Labor Day jobs report should show a modest but restrained hiring recovery after the surprisingly tame July payrolls update, with 114,000 jobs added compared to the 2024 average of 203,000 monthly job gains,” Hamrick said in a statement shared with Newsweek. “The August unemployment rate is seen falling to 4.2 percent from July’s 4.3 percent, which is the highest since November 2021.”
Falling mortgage rates have yet to have a significant impact on the U.S. housing market.
1qSo far, neither sales nor affordability has improved. According to a recent Redfin report, pending home sales fell 6.9 percent during the four weeks ending August 25, despite the median monthly U.S. housing payment falling to its lowest level since February.
“Continued improvements in mortgage rates are expected to drive more home sales,” says Skylar Olsen, chief economist at Zillow, in a Bankrate September 1 press release. “However, we are also entering a period of uncertainty for reasons that are often overlooked by econometric models: the behavior of buyers who may be holding out for further rate drops with growing confidence in an upcoming Fed rate cut, and the significant uncertainty surrounding the approaching elections. These factors may influence major decisions and have an impact on existing home sales as we near the end of the year.”