Buyers should keep an eye on the possibility of rate cuts in the next few months. Tharon Green/CNET
The average rate for a 30-year fixed mortgage seems poised to hold near 6.75% for the rest of the year.
Yet significant economic uncertainties could still push rates up or down in the coming months. Housing market experts consistently point to two major influences: the economic ramifications of the Trump administration's policies and the Federal Reserve's pace of interest rate cuts.
On July 29-30, the Fed plans to keep borrowing rates the same at its fifth monetary policy meeting this year. Though markets currently expect a Fed cut in September, that's not a guarantee given ongoing political and economic instability.
"Even a September move may require more definitive evidence that the economy is cooling," said Odeta Kushi, deputy chief economist at First American Financial Corporation. "For the housing market, it means the rate-cutting cycle many were hoping would ignite the 2025 homebuying season is still on hold."
Although the central bank doesn't directly dictate mortgage rates, its policy decisions indirectly influence consumer borrowing costs, including for mortgages, over the long term. Mortgage rates, which are primarily tied to 10-year Treasury yields in the bond market, are also sensitive to other factors, including investor sentiment.
Ultimately, it's unlikely that mortgage rates will shift significantly outside the 6.5% to 7% range unless the economy slows significantly or unemployment increases sharply.
The problems afflicting the housing market will take time to solve. Apart from steep mortgage rates, high home prices and limited inventory have all but barred buyers from purchasing and owners from refinancing or selling.
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