Mortgage rates just saw their biggest one-day drop in more than a year, offering some relief to homebuyers squeezed by affordability challenges.
According to Mortgage News Daily, the average rate on the 30-year fixed mortgage fell 16 basis points to 6.29% on Friday after a weaker-than-expected August employment report. That marks the lowest level since October 3 and the steepest single-day decline since August 2024.
“This was a pretty straightforward reaction to a hotly anticipated jobs report,” explained Matt Graham, Chief Operating Officer at Mortgage News Daily. He noted that bond markets consistently view jobs data as a major driver of rate volatility. Graham added on X that some lenders are now quoting in the high 5% range, making this the most favorable pricing seen in months.
The shift is significant compared with earlier this year. Back in May, the average 30-year fixed rate peaked at 7.08%. For buyers, the difference matters. A $450,000 home, slightly above the national median price, financed with 20% down would cost about $2,395 per month at 7%. At Friday’s 6.29% rate, that monthly payment falls to $2,226, saving buyers $169 each month before taxes and insurance.
That savings could determine not only affordability but also whether some borrowers qualify for a loan.
Investors responded quickly. Shares of major homebuilders like Lennar, DR Horton, and PulteGroup all rose roughly 3% by midday Friday. The iShares Home Construction ETF (ITB) has climbed nearly 13% over the past month as rates trended lower.
Still, questions remain about whether the drop will be enough to revive demand. Applications for home purchase loans were 6.6% lower last week than four weeks earlier, according to the Mortgage Bankers Association.
“Homebuyers grapple with a lack of affordability, sellers contend with more competition, and builders deal with lower buyer demand,” said Realtor.com chief economist Danielle Hale. She described the housing market as enduring a “cruel summer” rather than a collapse.
Analysts argue rates may need to dip further into the 5% range before sparking a meaningful rebound. Home prices remain elevated, and although price growth has cooled, national declines have yet to materialize. Add in uncertainty about the economy and jobs, and many prospective buyers are still holding back.
For now, though, the latest drop represents a rare win for buyers hoping for some financial breathing room.
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