Illustration by Lanette\u00a0Behiry\/Adobe\u00a0Stock<\/p>\n
A year ago, surprising jobs data sent rates soaring. This year\u2019s Sept. 4 report could also be pivotal, potentially resulting in volatility heading into fall.<\/p>\n
Key points:<\/p>\n
Mortgage rates are still heading in the right direction for homebuyers, but that could change on Friday with the much-anticipated jobs report.<\/p>\n
The 30-year fixed-rate mortgage averaged 6.5% this week, according to Freddie Mac’s survey<\/a>, an 11-month low. Mortgage News Daily<\/a>, which uses a different set of criteria to determine average mortgage rates, showed rates trending down this week, landing at 6.45% on Sept. 4.<\/p>\n Almost a year ago, mortgage rates dropped to 6.08%, the lowest level since Sept. 2022 \u2014 but soon shot up due to surprising jobs data<\/a> and pre-election uncertainty, even as the Federal Reserve began cutting short-term interest rates<\/a>.<\/p>\n Now, a year later, another jobs report could prove pivotal in determining where mortgage rates go next. Related reports from earlier this week, including one showing fewer job openings<\/a>, suggest the Sept. 5 release will point to further weakening of the labor market.<\/p>\n ‘Volatility ahead’<\/p>\n “Historically, a weaker or softer-than-expected jobs report fuels optimism for Federal Reserve rate cuts and can lower bond yields, thereby nudging mortgage rates downward,” said Hannah Jones, senior economic research analyst at Realtor.com.\u00a0<\/p>\n “Conversely, a robust job report may reinforce inflation concerns and elevate Treasury yields, putting upward pressure on mortgage rates. This setup underscores the potential for increased mortgage rate volatility ahead,” Jones noted.<\/p>\n Buyers ‘should not be trying to time rates’<\/p>\n While rate volatility is one potential outcome, it’s also possible that mortgage rates will stay fairly level until there are clearer signals about where the economy is headed, according to Lisa Sturtevant, chief economist at Bright MLS.<\/p>\n “Homebuyers in the market right now should not be trying to time rates,” Sturtevant said. “Instead, prospective buyers should take advantage of greater leverage and more inventory they have in most markets. Sellers are starting to reset expectations on pricing<\/a>, and more are ready to come to the table to negotiate and to offer buyer assistance.”<\/p>\n Despite their advantage, buyers don’t seem to be responding. Mortgage purchase applications pulled back after a four-week run of increases, noted Joel Kan, deputy chief economist at the Mortgage Bankers Association. Overall applications were down 1.2% for the week ending Aug. 29, while the unadjusted Purchase Index dropped 6%, according to the MBA<\/a>.<\/p>\n Affordability is slowly improving<\/p>\n The steady decline in rates has offered some relief in the form of lower monthly mortgage payments, according to Redfin’s weekly report<\/a>, which put the median housing payment at $2,593. That’s the lowest amount since January, but it’s still up 5% year-over-year and more than double what it was prior to the pandemic<\/a>.<\/p>\n “Mortgage rates haven’t come down significantly enough to bring back a flood of buyers. House hunters are on rate watch, hoping they’ll drop below 6%,” said Mariah O’Keefe, a Redfin Premier agent in Seattle.<\/p>\n