August jobs report looms large for mortgage rates

Housing affordability metrics have showed improvement this summer and the purchase market could benefit this fall if less restrictive monetary policy materializes.

HousingWire’s Mortgage Rates Center shows that the average 30-year conventional loan rate on Tuesday was 6.72%, down 2 basis points from a week ago. Rates for 30-year jumbo loans averaged 6.36%, down 6 bps, while rates for 30-year loans through the Federal Housing Administration (FHA) dropped by 3 bps to reach 6.40%.

Samir Dedhia, CEO of One Real Mortgage, noted in commentary last week that rates are near their lowest levels since October 2024, not long after the Federal Reserve began to implement a series of cuts to benchmark rates that totaled 100 bps.

“Rates have now dropped nearly half a percent from their January highs, giving homebuyers and homeowners more breathing room to explore options,” Dedhia said.

“Much of this momentum is being driven by growing confidence that the Federal Reserve may cut rates later this year. Just last week, Fed Chair Jerome Powell acknowledged that the data is moving in the right direction and that the central bank is ‘carefully considering’ a shift in policy. That helped cool bond yields and sent mortgage rates trending downward again, a welcome signal for buyers waiting on the sidelines.”

Interest rate traders remain bullish on the prospects of a 25-bps rate cut later this month. The CME Group’s FedWatch tool on Tuesday showed that nearly 92% believe that the policy rate will drop to a range of 4% to 4.25% — up from 80% at the beginning of August.

Friday’s jobs report from the U.S. Bureau of Labor Statistics will be a crucial barometer for Fed officials as they weigh the merits of a cut. Monthly employment gains slowed to 73,000 in July while some 250,000 reported gains in May and June were erased by subsequent revisions. It’s likely that the Fed will pare back rates unless the jobs report comes in unusually hot.

It’s also possible that the ongoing political battle between the Fed and the Trump administration could weigh on interest rates. Last week, President Trump attempted to fire Fed Governor Lisa Cook over accusations of mortgage fraud. Cook responded by filing a lawsuit in which she argued that the president doesn’t have the legal standing to remove her “for cause.” The case could wind up in the hands of the Supreme Court.

Where does housing stand in September?

The newest Housing Market Tracker from HousingWire shows that lower mortgage rates in recent weeks are influencing inventory levels across the country.

Even with mortgage rates remaining well above 6%, annualized growth in the number of homes for sale has dropped to 22% — down from a recent peak of 33%. Additionally, 42% of current listings include a price cut, up from 39% a year ago.

HousingWire Lead Analyst Logan Mohtashami believes that home-price appreciation is on track to finish 2025 near his forecasted figure of 1.77% — well below last year’s 4% growth. “The rise in price reductions this year compared to last reinforces my cautious growth forecast for 2025,” he wrote Saturday.

First American’s metrics also indicated improving affordability conditions. The company’s newest Real House Price Index — which adjusts nominal home-price growth for household income and interest rate changes — showed that affordability improved 3.1% during the year ending in June.

The company noted that the index is still 70% worse than its five-year average prior to the COVID-19 pandemic but 12% better than its recent low point in October 2023.

In June 2025, home prices grew by 1% or less in 27 of the 50 markets tracked by First American, while income growth outpaced home-price appreciated in 35 of 50 markets. Austin and San Francisco are leading the trend as prices in these two markets have dropped by 13% and 10%, respectively, from their peaks in 2022.

“Affordability is beginning to shift — gradually and unevenly — but the momentum is turning,” First American chief economist Mark Fleming said in written commentary. “The most likely path forward is a slow rebalancing, driven by income growth outpacing home price appreciation, some moderation in prices as inventory improves, and eventual downward pressure on mortgage rates, if economic conditions soften.

“While this process will take time, likely years, the balance of power is no longer as one-sided as it was during the pandemic frenzy. For those prospective buyers who have been waiting on the sidelines, the housing market is finally starting to listen.”