Housing market just went on sale' as mortgage rates hit 11-month low

By Angela Gonzales

Residential mortgage interest rates continue to drop, creating a window for homebuyers.

The 30-year fixed-rate mortgage averaged 6.35%, according to the Primary Mortgage Market Survey released by Freddie Mac (OTCQB: FMCC) on Sept. 11, marking a notable decline.

“The 30-year fixed-rate mortgage fell 15 basis points from last week, the largest weekly drop in the past year,” said Sam Khater, Freddie Mac’s chief economist. “Mortgage rates are headed in the right direction, and homebuyers have noticed, as purchase applications reached the highest year-over-year growth rate in more than four years.”

Mortgage rates were 7.26% on Jan. 11, according to Mortgage News Daily, which was tracking mortgage rates at 6.27% on Sept. 11, said Tina Tamboer, senior analyst for The Cromford Report.

When mortgage rates drop by 1%, principal and interest payments drop 10% across the board, Tamboer said.

For example, a $2,500 principal and interest quote in January would now be $2,250 today, she said.

"Combine that with asking prices declining 2-3% over the last four months and it's a double win for buyers," Tamboer said. "I think it's safe to say the housing market just went on sale."

Mortgage interest rates are at their lowest in 11 months, said Sarah Perkins, director of industry research and senior account executive for Navi Title Agency.

There is room for rates to fall further, but predicting rates is futile, she said.

"CPI came in above expectations, but rates still fell today," she said. "Some people are talking about the Fed doing a 50 basis point rate drop next week; that could bring rates down further. A 25 basis point drop has already been baked into mortgage rates."

Perkins said she's happy to see Tamboer saying the housing market is going on sale.

"Hopefully, it is enough to drive more demand," Perkins said.

Recent data from Homes.com suggests that an ongoing shift is underway in the Phoenix for-sale housing market in favor of buyers.

The median sale price of homes in the metro fell 0.4% in August compared to a year ago, tying San Francisco for the third-largest annual decrease in the country, said Connor Devereux, director of market analytics for CoStar Group/Homes.com.

Data from Homes.com shows home prices are increasing across the country except for a few markets like Phoenix.

The inventory of for-sale homes was up 27% annually, according to the most recent numbers from Homes.com, allowing would-be homeowners to be choosier with their purchase decisions.

"When combined with the decline in mortgage rates, many buyers may find a more accommodating housing market today than most other times over the past two years," Devereux said. "However, whether current market conditions translate into a meaningful acceleration of home sales activity remains an open question. First-timers still face barriers to homeownership, including the cash needed for down payments as well as prices and borrowing costs that are still well above what was seen pre-pandemic."

Michael Fraley, Arizona division president of Oakwood Homes, said he expects these recent rate drops to boost demand.

Following the last rate cut, Oakwood Homes experienced increased interest in its communities in Surprise and Coolidge, he said.

"At Oakwood Homes, we see both the promise and complexity of this market shift and evolving landscape for both homebuyers and builders," Fraley said. "For buyers, the recent rate cuts offer a valuable window of opportunity to achieve homeownership. Those planning to enter the market in the next year should carefully consider their options now. It's important that they know even a small reduction in interest rates can lead to significant savings over the life of a mortgage.

Final Thoughts

• Mortgage rates have dropped to their lowest point in 11 months, creating an affordability boost for buyers.

• A 1% drop in rates means roughly 10% lower principal and interest payments.

• Asking prices in Phoenix have declined 2–3% over the last four months, adding to buyer advantage.

• Metro Phoenix inventory is up 27% year-over-year, giving buyers more options and negotiating power.

• Builders and analysts expect rate cuts to drive increased buyer demand in the coming months.