Mortgage Rates Fall to 6.46% During ‘Buyer-Friendly End of Summer’

Mortgage rates fell this week, with the average rate for a 30-year fixed home loan going from 6.49% last week to 6.46% for the week ending Aug. 22, according to Freddie Mac.

“Although mortgage rates have stayed relatively flat over the past couple of weeks, softer incoming economic data suggest rates will gently slope downward through the end of the year,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “Earlier this month, rates plunged and are now lingering just under 6.5 percent, which has not been enough to motivate potential homebuyers. We expect rates likely will need to decline another percentage point to generate buyer demand.”

As a result, “things are shaping up for a buyer-friendly end of summer,” according to Realtor.com® senior economist Joel Berner in his recent analysis.

Will the housing market continue to heat up as temperatures cool down this fall? 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.”

Where mortgage rates might be headed

There was very little change this week in Freddie Mac’s 30-year mortgage rate, as the financial market holds its breath awaiting Friday’s speech by Federal Reserve Chair Jerome Powell.

Investors and economists hope Powell will provide important clues about the central bank’s next steps on where interest rates are heading.

Last month, inflation dropped below 3% in July for the first time since 2021, “fueling widespread expectations that the Federal Reserve will initiate its first interest rate cuts in September,” says Realtor.com economist Jiayi Xu. (While the Fed doesn’t set mortgage rates, Fed rates and mortgage rates tend to move in the same direction.)

However, unemployment rose to 4.3% in July, sparking concerns about a potential recession.

Thus, policymakers will time rate cuts carefully, “seeking to curb inflation without triggering a sharp increase in unemployment,” says Xu.

Home prices continue to fall

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

Median list prices fell 1.2% year over year for the week ending Aug. 17.

This marks 12 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 overall moderation in prices this summer.

Since January, the share of listings with price reductions has been more in line with pre-pandemic levels as the pace of sales has moderated, “bringing more listings in line with buyers’ budgets,” says Berner. 

The number of homes for sale shot up

For the week ending Aug. 17, the total number of houses for sale increased by 34.8% compared with the same time last year, marking a 41-week streak of growth.

With considerably more homes on the market than there were at this time in 2023, “sellers are starting to be relieved of the mortgage rate lock-in effect that has constrained the supply of listings over the past year,” says Berner.

In the meantime, fresh listings new to the market dipped by 0.2% for the week ending Aug. 17 year over year.

Despite mortgage rates falling in early August, new listings are “struggling to rebound as negative sentiment around selling a home persists,” says Berner. “Potential buyers are just starting to see the recovery in the number of options available to them post-pandemic.”