As rates for home loans hit their lowest level in over a year, housing market activity is responding. But upside from here may be limited unless rates take another big dip lower in the coming months.
The average national rate for 30-year fixed-rate mortgages was 6.19% in the most recent week, Freddie Mac said on Oct. 28. That’s the fourth weekly decline in a row, and the lowest level for the most popular mortgage product since early October of 2024. While there has been an uptick in refinancing nationally, new home sales remain relatively stagnant.
Lower rates are helpful for would-be buyers. Current real-estate data shows that the typical U.S. monthly payment is $2,556, barely any higher than it was a year ago. Compared with one month ago, when rates hovered around 6.4%, buyers have gained roughly $9,500 in purchasing power
Buyers are jumping on the opportunity. The National Association of Realtors reported that sales of previously owned homes were 1.5% higher in September than August. Data on sales of newly constructed homes is compiled by Census Bureau and remains on hold during the government shutdown.
For customers borrowing conventional 30-year fixed-rate mortgages, over 60% of the current locks are below 6%, with many of those borrowers buying down points or other methods to get the lower rate. Consumers are responding to the current rates environment by buying down the interest rate down.
The bigger question is what will motivate more homeowners to sell.
The bigger question, however, is about what will induce more homeowners to become sellers.
Last September, mortgage rates fell to as low as 6.08%, but bottomed out there and then begin to gradually marching back up. While the lower rates have sparked some increase in home buyer activity, it appears sellers are waiting to see if rates go lower and if housing prices slowly bounce back.
Brett Dempsey, branch manager at Lone Star Financing, agrees. Rates in the mid-5% range will “get the fringe out,” he said, “but the everyday American homeowner is going to wait it out if they can and my prediction is we won’t see a true correction in Texas housing prices until late Spring or Summer of 2026.
It appears that most homeowners continue to believe that the broader economic environment points toward a looming recession, he said. Between health care, childcare costs, groceries and transportation and more, “the stress is real for American families at this point and this uncertainty continues to stall the Texas real estate market.
Let’s Make Homeownership A Reality
At Lone Star Financing, Texas real estate and home financing is what we know best. Whether you’re buying in Austin or refinancing in Fort Worth, we’ve got you covered! As a local Texas mortgage lender we’re here to provide honest guidance and smart loan solutions tailored to your needs.
Contact us today (855) 314-8080 for a free consultation and let’s talk about getting you home.
Written by Ryan Collins, Business Development Manager at Lone Star Financing. Ryan has over 15 years of experience helping Texans finance their homes and is passionate about guiding first-time buyers through the process with clarity and confidence.
