Mortgage rates fall again, but buyer activity stays muted
The 30-year mortgage dropped for the third straight week, but rates remain much higher than a year ago — and forthcoming jobs data could slow recent progress.
Key points:
- The weekly average 30-year fixed-rate mortgage fell for the third consecutive week, averaging 7.18% as of Nov. 5. Though lower than the 7.5% rates seen just a few weeks ago, rates remain well above the levels recorded this time last year.
- Overall inventory continues to rise, which is unusual for this time of year. But pending sales have slowed, with Redfin recording the lowest levels in records dating back five years.
- Investors are anticipating a new jobs report slated for release on Nov. 6. Though strong labor market data wouldn’t be unwelcome, such a report could raise inflation concerns and slow the decline in mortgage rates.
Though the housing market is still facing a difficult rate environment, potential homebuyers are starting to see steady improvement when it comes to home financing.
Mortgage rates fall for 3rd consecutive week
The 30-year fixed-rate mortgage averaged 7.18% this week, according to Freddie Mac's weekly survey. That's down from 7.24% a week ago and marks the third straight week of declines. The weekly average rate is, however, still significantly higher than it was a year ago, when the 30-year rate was at 6.22%.
But the downward drift in rates hasn't spurred more borrower activity. Overall applications fell 1.2% for the week ending Oct. 30 compared with the week before, according to the Mortgage Bankers Association (MBA), and year-over-year purchase applications dropped 19% while refinance applications fell 60%. Meanwhile, the share of adjustable rate mortgages continues to increase, according to Mike Fratantoni, MBA's SVP and chief economist.
All eyes on upcoming jobs report
This week, investors have been primarily focused on the 2026 midterm elections and the upcoming jobs report due out Nov. 6, said Hannah Jones, senior economist at Realtor.com. The big wins by Democrats in both chambers of Congress have led to speculation that a stronger push could soon be made by politicians in Washington, D.C., to end the war with Iran. If a resolution in the months-long conflict is reached, that could lead to lower gas prices and lower inflation.
However, early signs indicate that Friday's jobs report might contain strong data, which could elevate inflation concerns and slow the recent decline in mortgage rates. "While solid hiring supports housing demand over time, a stronger-than-expected report could also lift bond yields and slow the pace of rate declines in the near term," Jones said.
The stock market's Nov. 5 tech sell-off, which appears to be a response to concerns that the election results may lead to slowing data center construction, could also have implications for mortgage rates. With Nasdaq down around 5% in early afternoon trading, the 10-year Treasury — which heavily influences fixed-rate mortgages — is also falling to levels last seen in early September as investors seek other places to put their money.
Market slowdown hasn't stopped yet
Other housing data continues to point to a slowing market. Pending sales were down 0.6% week-over-week for the four weeks ending Nov. 1 — the lowest levels in records dating back to 2021, according to Redfin.
Zillow estimates that pending sales fell 16.8% in October compared to a year ago, the biggest annual dip since August 2023 and the slowest pace recorded for October since 2018. While that's not good news for the real estate market, Zillow's chief economist, Mischa Fisher, expects that this will be the worst of the slowdown for this year.
"I expect the pace of the slowdown to ease into the new year. There are deals to be had for buyers able to brave the affordability headwinds in the coming months, and the continued inventory buildup means there is a lot of upside for sales into next year if we get rate relief," Fisher said.
While new listings are also slowing amid homeseller concerns about the current market, overall inventory continues to grow, with growth measurements varying from one study to the next. Zillow, for example, estimates that inventory is up 3.4% year-over-year, while Redfin has pegged the increase at 2.1% and Compass Chief Economist Mike Simonsen estimated a rise of 6.4%.
"In recent years, the third week of October would have been the top of inventory for the season," Simonsen said in his weekly YouTube update. "This year, inventory is still climbing, and I expect that will continue for two more weeks."
Little change in home prices
Economists say home prices are either flat or only slightly different now compared to a year ago. Redfin's rolling four-week average has the median home sale price at $388,604, down 0.4% and the third straight week the price has declined following three years of increases. Zillow's overall home value index pegged the typical home at $364,812, up 0.7% year-over-year.
Simonsen estimated that the median home sale price was around $390,000, down 2.3% below a year ago and trending around 2024 levels. "For the homesellers waiting for the spring, this tells me there aren't many scenarios where suddenly there's a price strength from greater demand," he said.