A
pivotal jobs report on Friday could send mortgage rates into a tailspin, potentially altering the trajectory of homebuying in the fall. The 30-year fixed-rate mortgage averaged 6.5% this week, according to Freddie Mac, marking an 11-month low. However, even as rates have declined in recent weeks, applications and buyer demand remain subdued.

    Mortgage News Daily reported a similar trend, with rates trending down to 6.45% on September 4. A year ago, mortgage rates plummeted to 6.08%, only to surge due to unexpected jobs data and pre-election uncertainty. Now, another jobs report could be the catalyst for future rate movements.

    Historically, weaker-than-expected job reports have fueled optimism for Federal Reserve rate cuts, potentially lowering bond yields and nudging mortgage rates downward. Conversely, robust job reports may reinforce inflation concerns, elevating Treasury yields and putting upward pressure on mortgage rates.

    Buyers should not try to time the market, according to experts. Instead, they can take advantage of greater leverage and more inventory in most markets. Sellers are starting to reset expectations on pricing, and some are ready to negotiate and offer buyer assistance.

    Despite these advantages, buyers remain hesitant. Mortgage purchase applications pulled back after a four-week run of increases, with overall applications down 1.2% for the week ending August 29. The steady decline in rates has offered some relief in the form of lower monthly mortgage payments, but affordability is still a concern.

    Mortgage rates haven't come down significantly enough to bring back a flood of buyers, and house hunters are on rate watch, hoping they'll drop below 6%. Inventory appears to have peaked due to seasonality and seller pessimism around getting the price they want.