The average rate on the 30-year fixed mortgage fell sharply on Friday, dropping 16 basis points to 6.29% after a weaker-than-expected August employment report. This marked the lowest level since early October and the steepest one-day decline since August 2024, signaling a potential turning point for the housing market after months of elevated borrowing costs.
Mortgage News Daily noted that rates are finally breaking out of the high 6% range, where they had been stuck for an extended period. Matt Graham, Chief Operating Officer of Mortgage News Daily, explained that the move was a direct reaction to the jobs report, which remains the most influential data point for rate volatility. Graham added that many lenders are now offering quotes in the high 5% range, the most competitive levels in nearly a year.
The decline is significant compared with May, when the 30-year fixed rate peaked at 7.08%. For buyers, the difference translates into real savings. On a $450,000 home—just above the national median—using a 30-year fixed mortgage with 20% down, monthly payments would total $2,395 at 7%. At the new rate of 6.29%, that figure falls to $2,226, a $169 monthly savings. For many households, that reduction could determine both affordability and mortgage qualification.
Markets responded positively. Homebuilder stocks, including Lennar, DR Horton and Pulte, all climbed around 3% during Friday’s session. The Homebuilding ETF ITB has also gained nearly 13% over the past month as rates have eased, reflecting renewed optimism within the sector.
Yet questions remain about whether lower rates will be enough to bring homebuyers back into the market. Mortgage applications to purchase a home have not yet increased, remaining 6.6% lower than four weeks ago, according to the Mortgage Bankers Association. Economists note that affordability challenges persist, with high home prices and economic uncertainty weighing on buyer confidence.
Danielle Hale, chief economist at Realtor.com, said Friday that both buyers and sellers face difficult conditions, while builders contend with weaker demand. She described the environment as a “cruel summer” for the housing market rather than a collapse. Analysts suggest that mortgage rates may need to fall further into the 5% range before buyers return in large numbers. While price appreciation has slowed, home values remain elevated nationwide, keeping pressure on affordability even as borrowing costs decline.
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