Mortgage Rates Dive to 6.09% as Housing Market Shows ‘Sense of Optimism’

Realtor.com; Getty Images (1)

Mortgage rates plunged from 6.20% to 6.09% for a 30-year fixed home loan for the week ending Sept. 19, according to Freddie Mac.

“Mortgage rates continued declining towards the six percent mark, reviving purchase and refinance demand for many consumers,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “While mortgage rates do not directly follow moves by the Federal Reserve, this first cut in over four years will have an impact on the housing market. Declining mortgage rates over the last several weeks indicate this cut was mostly baked in, but we expect rates to fall further, sparking more housing activity.”

Since the Federal Reserve slashed rates yesterday for the first time since 2020, “a sense of optimism is emerging this fall,” says Realtor.com® economist Jiayi Xu in her recent analysis.

This historic cut has been anticipated for months, and is expected to give the market a much-needed jumpstart.

As a result, Realtor.com senior economist Ralph McLaughlin expects to see “both buyers and sellers ramp up their activity in the spring buying season.”

But many just might come off the sidelines sooner, since Realtor.com’s Best Time to Buy—Sept. 29 to Oct.5—is just weeks away.

“The best week could provide a balanced combination of market conditions that are more favorable to buyers compared to the rest of the year,” says Xu.

In the meantime, here’s a snapshot of the latest housing market data and what it means for homebuyers and sellers in our latest “Weekly Housing Market Update.”

Mortgage rate shakeup

Yesterday, weary buyers stymied by high interest rates finally got a break when Fed announced its aforementioned half-point rate cut, bringing the central bank’s effective benchmark rate to about 4.8%, down from a two-decade high of about 5.3%.

Since Fed rates and mortgage rates tend to move in the same direction, mortgage rates are expected to continue taking a tumble.

“Mortgage rates could bottom out between 6% to 6.2% throughout the rest of the year and into the high 5’s by next spring,” says McLaughlin.

As rates continue to go down, Xu says “there are excellent opportunities for homebuyers aiming to finalize their home purchases,” and “we expect sellers’ motivation to sell could continue to rise this fall.”

Home prices dip

Not only are mortgage rates dropping, home prices are dropping, too.

“This summer has seen a consistent cooling in prices dating back to data from June 1st,” says Xu.

In August, the national median list price was $429,990—and median list prices fell 1% year over year for the week ending Sept. 14.

This marks the 16th week in a row that the median listing price in the U.S. was less than or equal to what it was in the corresponding week of 2023.

Meanwhile, the number of listings with price cuts grew by 33% the week ending Sept. 14 compared to the same time last year.

“Last month, the share of listings with price reductions reached the highest for an August in over five years as sellers adjust asking prices to better meet what buyers are looking for,” says Xu.