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Mortgage Trends Update from Town Team: What You Need to Know (Fall 2025)

  • Zachary Schwartz
  • Sep 30
  • 5 min read

Man with a pumpkin head, wearing a suit, holds a clipboard near a "For Sale" sign and a house. Another man looks on in a puzzled way.
Realtor with a pumpkin head, wearing a suit, holds a clipboard near a "For Sale" sign with the Town Team Logo and a house. Another man looks on in a puzzled way.

The housing and mortgage landscape is at an inflection point. Borrowing costs, supply shifts, and buyer behavior are all in flux. For buyers, sellers, and refinancers alike, understanding where we stand now (and where we may go) is essential.


1. Mortgage Trends: Recent Rate Moves & Outlook


Recent Mortgage Trends

  • The average 30-year fixed mortgage rate has declined from recent highs to about 6.13 %, its lowest in three years. 

  • Some data sources report mid-6 % range levels in recent weeks, after weeks of downward pressure. 

  • However, in the week ending early September, the 30-year rate averaged around 6.49 % (per MBA data) 

  • Freddie Mac’s published rates have shown modest movement, and their weekly news suggests recent declines are not assured to persist.

  • Subscribe to the Town Team Blog to stay in loop on mortgage trends as we head into fall and winter. 


What’s driving rate changes

  • Mortgage rates tend to follow longer-term Treasury yields, especially the 10-year Treasury.

  • The Federal Reserve’s recent cut of 25 basis points has raised expectations of further cuts later in 2025, putting downward pressure on yields. 

  • But bond markets are wary: inflation surprises or strong economic data could reverse rate declines.

  • Some analysts caution that mortgage rates may not fall far unless the broader economy weakens. 


Consensus forecasts

  • Fannie Mae forecasts rates to end 2025 around 6.4 % and fall to 5.9 % in 2026. 

  • Some lenders view further cuts of 25 basis points in October and December as plausible, potentially pushing rates closer to 6 % territory by year end. 

  • Others are more cautious, suggesting rates could remain in the mid-6 % band unless economic headwinds intensify. 


Takeaway: We may see further modest downward drift in mortgage rates, but a dramatic fall (say below 6 % across the board) is probably optimistic unless macro economic conditions deteriorate.


2. Housing Supply & Inventory Trends


Supply dynamics are shifting for the first time in years. Inventory relief is modest but meaningful in many markets.


National inventory trends

  • Total housing inventory (single-family + condos) stood around 1,550,000 units as of April 2025. 

  • Compared to 2024, inventory is rising: some reports estimate 25 % year-over-year gains in active listings in midsize and Sun Belt markets. 

  • HousingWire notes there are 33 % more unsold single-family homes on the market now vs. a year ago. 

  • But national inventory is still slightly below 2019 levels (about 11 % lower) per ResiClub. 

  • On the Realtor/Redfin side, in August 2025 there were about 2,104,309 homes for sale, up ~9.9 % year-over-year. 


Regional and market segmentation

  • The Sun Belt and Mountain West are among the regions where inventory has rebounded more strongly. 

  • In contrast, the Northeast and Midwest remain relatively tight compared to pre-pandemic norms. 

  • The “lock-in effect” is loosening: homeowners with very low mortgage rates are now more willing to sell as rates soften and move to purchase new homes. 

  • New home inventory is somewhat more generous: as of August 2025, new houses for sale represented a 7.4-month supply. 


3. Demand, Affordability & Buyer Behavior


Rates and supply don’t tell the full story. Demand and affordability remain central constraints.


Recent sales activity

  • Existing home sales fell 0.2 % from July to August 2025 (annualized rate ~4.00 million). 

  • Year-over-year, sales rose 1.8 %. 

  • The national median home price in August was $422,600, up ~2 % year-over-year (a record high for August). 

  • For new homes, the median price in August was $413,500, slightly under comparable existing home levels. 

  • The months’ supply of existing homes is about 4.6 months. 


Affordability constraints

  • High mortgage rates plus elevated home prices continue to push many buyers out of market reach, especially first-time and lower-income buyers. 

  • Even as inventory rises, much of it is in upper-end homes. For affordable, starter homes, competition remains stiff. 

  • Regional disparities matter: in markets with high in-migration (Sun Belt, Mountain West), demand remains stronger, which compresses affordability. 


4. Strategic Advice


Some tactical takeaways:


For Homebuyers (especially first-time buyers)

  • Get pre-approved now. If rates dip further, you’ll be ready to act. 

  • Lock when you have reasonable terms. Don’t wait indefinitely for the “perfect” rate, especially as bonds and inflation remain volatile.

  • Target oversupplied markets or house styles. Lean toward listings that have stayed on the market for a while.

  • Negotiate non-price terms. Consider getting rate buydowns, seller credit for closing, or extended inspections.

  • Balance your budget carefully. A small increase in rate can have large monthly cost impact over 30 years.


For Homeowners Considering Refinance

  • Refinancing makes sense only if net savings exceed closing costs within a payback period you accept.

  • Check your credit and debt load first. Even a slightly improved credit score can yield better refinance terms.

  • Refinance into stability. If you lock into a fixed rate now, protect yourself from future upward moves.


For Sellers

  • Price for the current market, not the 2020–22 boom. Buyers have more inventory and tougher options now.

  • Highlight financing flexibility. Show your property is viable at today’s rates.

  • Consider incentives. Rate buy-downs, seller contributions, or flexible closing terms can make your listing more competitive.


5. Risks & Wild Cards to Watch

  • Inflation surprises or tight labor data could stall further rate drops or push rates higher.

  • If the economy weakens, we could see deferred demand or a stall in sales.

  • Regional downturns: areas heavily dependent on single industries or migration may have volatile housing dynamics.

  • Tariff, supply chain, or policy changes could raise construction and renovation costs, which affects new home supply.

  • Mortgage backstop or regulatory changes (e.g. credit rules, conforming limits) could shift lending practices.


6. Outlook & Projections

  • Fannie Mae predicts 4.72 million home sales in 2025 and 5.16 million in 2026. 

  • Home price appreciation is expected to slow. Bankrate’s forecast sees growth around 2 % in 2025. 

  • Some forecasters expect mortgage rates to drift to ~6.4 % by year’s end, with a possibility of dipping toward 6 % in 2026 if economic conditions weaken. 

  • J.P. Morgan is cautious: demand is suppressed, and meaningful recovery may require rates nearer to 5 %. 


In short, the market appears to be moving into a more balanced phase. Buyers contain more negotiating power than they had amidst the low-rate, low-inventory years. Sellers must be realistic and agile. And refinancers will need sharper math to justify a move.


Town Team is here to help you EVERY step of the way, so don't hesitate to call/email/text if there's anything you need.


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