Buyers who are waiting for rates to come down before making their home purchase will likely have to wait until next year for that to happen, according to economists commenting on this week’s mortgage data.
Mortgage rates changed little from last week, with the latest Freddie Mac Primary Mortgage Market Survey® showing the 30-year fixed-rate mortgage (FRM) average 6.66% as of Aug. 27, up one basis point from last week’s average of 6.65%. The 30-year FRM is up year-over-year from 6.56% In addition, the 15-year FRM averaged 5.98%, up from last week when it averaged 5.95% but down from last year when it averaged 5.69%.
While rates remain elevated, Sam Khater, Freddie Mac’s chief economist, pointed to some positive economic fundamentals that are aiding the U.S. housing market.
“The economy remains resilient, demonstrated by steady consumer spending and rising household incomes,” he said in a statement. “More homes coming on the market and slower price growth in many areas are giving buyers better options and helping create a more balanced housing market.”
Bright MLS Chief Economist Lisa Sturtevant said a growing number of signs indicate that the second half of the year will see slower-than-anticipated home sales activity and that total 2026 transactions will come in at or below 2025 levels.
“At the end of last year, the expectation was for lower rates and more home sales in 2026,” said Sturtevant. “This year was poised to be the turnaround year as we headed back towards long-term average sales activity. But geopolitical and economic uncertainty have kept mortgage rates elevated, inflation is still a concern among many would-be homebuyers and sellers, and consumer confidence is shaky.”
Sturtevant agreed the strengthening economic conditions like increased inventory, slower home price growth and rising incomes have improved affordability for starter homes, but noted that many first-time homebuyers are still priced out of the market or have decided to wait for borrowing costs to come down.
“They may have to wait until 2027,” she stated. “It is likely that mortgage rates are going to remain right about where they are in the second half of the year. Home price growth will ease, which will improve affordability enough to bring some buyers into the market, but financial constraints and uncertainty will keep others on the sidelines.”
Realtor.com Senior Economist Hannah Jones said all eyes now turn to Fed Chair Kevin Warsh’s address at the Jackson Hole conference on Friday, his first as chair.
Warsh is expected to weigh in on inflation, which remains elevated. July’s Personal Consumption Expenditures (PCE) report, the Fed’s preferred inflation gauge, came in higher than expected this week as inflation held at 3.7% annually–nearly double its stated goal of 2%–rather than cooling to the 3.6% economists had forecast, Jones noted. Unless the Federal Reserve can bring inflation down to its goal, the housing market may remain under threat, however. Another report this week from the Department of Housing and Urban Development (HUD) showed new-home sales falling 10.5% for July.
Zooming out, Jones noted that mortgage rates have climbed for much of the year, driven largely by the Iran conflict’s effect on oil prices, which has kept inflation expectations, and by extension mortgage rates, elevated.
“That means buyers haven’t gotten much relief on the financing side,” Jones said. “Home prices, however, tell a different story and the median listing price has now fallen year-over-year for nine straight months, down 2.4% in July to $428,950. Combined with growing inventory and homes sitting on the market slightly longer, this points to a market that’s rebalancing, giving buyers real room to negotiate even where rates haven’t budged.”
Click here for Freddie Mac’s full report.
