After a disappointing spring and summer, the housing market could start to heat up as fall approaches with the latest plunge in mortgage rates.
Bond yields tumbled on Friday as the weaker-than-expected jobs report raised expectations for rate cuts from the Federal Reserve. The 10-year Treasury yield dived 10 basis points to 4.076%, the lowest since April.
The Fed did lower rates, but surprised Wall Street by starting with a jumbo-sized half-point cut. Then the jobs data suddenly improved, raising fears that the Fed’s cuts might overheat the economy. Bond yields and mortgage rates went back up.
For much of this year, the job market appeared resilient, even as President Donald Trump’s tariffs were keeping inflation—and mortgage rates—elevated.
If borrowers can secure mortgage rates in the low 6% range or below, that would represent a huge improvement from May, then they were above 7%.
As home prices and borrowing costs remained high throughout the critical spring selling season and the summer, the housing market saw minimal activity as prospective buyers remained on the sidelines.
Sales of existing homes have largely been flat this year, even as the number of listings has climbed, suggesting demand is weak. That has suppressed home prices. In addition, construction of new single-family homes remains lethargic, and building permits have mostly declined this year.
Chen Zhao, Redfin’s head of economics research, blamed “rising home prices, high mortgage rates, and economic uncertainty, [which] have made it increasingly difficult to own a home.”
