T
he recent jobs report has pushed 30-year mortgage rates closer to the 6.5% range, but economists warn that inflation risks could drive them back up. Despite this, rates have fallen for three consecutive weeks and are now at their lowest level since April.
Key points:
* Mortgage rates dropped to 6.63%, the lowest weekly average since April 10
* The decline may be short-lived due to new tariffs potentially leading to higher inflation
* Inventory growth is slowing as sellers become discouraged by the sluggish market
* Economists warn that homebuyers should lock in lower rates quickly, as they may not last
The drop in mortgage rates has led to a surge in mortgage applications, with refinance applications up 5% and purchase applications up 1%. However, new tariffs could disrupt this momentum. Builders are already facing higher costs due to the tariffs, which will push construction prices higher.
Inventory growth is stabilizing as sellers become tired of the sluggish market, leading to softer price growth. National home prices are barely above last year's levels, and there are scenarios in which year-over-year prices could fall slightly by the end of the year. Slower price growth is improving affordability in many areas, with cities like Oakland, California, seeing a 4.6% drop in income needed for a median-priced home.
"A lot of sellers are offering $10,000-$15,000 to cover buyer's closing costs," said Katie Shook, a Redfin Premier agent in Phoenix. "Some home features aren't getting the return they used to."
