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n Oct 16 2025 the Fed cut the federal‑funds target by 25 bps to 4.00‑4.25%, citing a weakening labor market and modest inflation. The move, expected after weaker July‑August jobs data, pushed 30‑year mortgage rates to a 12‑month low of 6.25%, down from the 6.8‑7.0 % range that had dominated the spring buying season. This pattern echoes 2024, when the Fed’s three consecutive cuts beginning in September pulled rates near 6 % and spurred a Q4 rebound that ended the post‑pandemic housing slump. Yet after the October and December cuts, mortgage rates and long‑duration yields rose again as markets worried about inflation from easing policy amid a resilient labor market and strong consumer spending.

    The next two FOMC meetings will shape mortgage rates, which hinge on labor dynamics, GDP growth, and inflation trends. A government shutdown is delaying key data releases, such as the jobs report, adding uncertainty to policy decisions. While rates have eased modestly since the year’s start, they remain above 2024 levels since August, keeping buyers cautious amid ongoing price softening and outright declines in several Sunbelt markets.

    In Texas, the market has rebounded modestly after a sluggish spring. Pending sales rose 9.2 % YoY in July, 5.4 % in August, and 1.7 % in September, and year‑to‑date sales are 1.7 % above 2024 figures. The trajectory of mortgage rates in the coming weeks will be a key determinant of housing activity for the rest of 2025.

    Data are from the Texas Real Estate Research Center’s analysis of the Data Relevance Project and Texas REALTORS data. Views expressed are those of the authors and do not reflect endorsement by the Texas Real Estate Research Center, Division of Research, or Texas A&M University.