The housing market is showing the first signs of relief in months as mortgage rates ease and monthly payments dip to their lowest level since early 2025. But while affordability is improving on paper, many buyers remain cautious, holding out for further declines before making their move.
The average 30-year fixed mortgage rate slipped to 6.58%, according to Redfin, the lowest reading in 10 months. That drop has pulled the median U.S. monthly mortgage payment down to $2,616, its most affordable level since January.
Lower borrowing costs are beginning to stir demand. Pending home sales rose 1.6% year-over-year in the four weeks ending August 27, marking the second consecutive month of growth after a sluggish start to 2025. Redfin’s Homebuyer Demand Index is up 3% from last month, and home tour activity is running ahead of last year’s pace.
“Buyers are circling,” said Ali Mafi, a Redfin Premier agent in San Francisco. “Some are moving forward because sellers are more willing to negotiate, but others are waiting for mortgage rates to drop further. If rates fall sharply, competition will return quickly.”
That hesitation is still evident. Redfin agents in markets such as Seattle and Nashville reported little to no bump in demand over the past weekend. Many would-be buyers are waiting to see if the Federal Reserve cuts interest rates in September, though Redfin economists caution that current mortgage rates likely already factor in that expectation.
On the supply side, new listings increased 1.9% year-over-year, the largest jump in more than two months. After holding back amid weak demand, some sellers appear ready to re-engage now that rates are easing and buyers are cautiously returning.
With mortgage payments at their most affordable point this year and signs of life in both buyer and seller activity, the housing market could be at a turning point. The question now is whether buyers will step off the sidelines in greater numbers—or continue to wait for rates to fall further.
