US Mortgage Rates Fall for Two Straight Weeks but Fail to Rescue the Market; Home Sales Prices Drop for the First Time in Over Three Years

US mortgage rates fell for a second consecutive week but remained above 7%, failing to effectively boost the persistently sluggish housing market. High home-buying costs are forcing potential buyers to postpone purchase plans while prompting more sellers to cut listing prices. The latest data show that US home sales prices have fallen for the first time in more than three years, further exacerbating the supply-demand imbalance in the housing market. According to data released by Freddie Mac on Thursday, the average rate on a 30-year fixed-rate mortgage in the US fell to 7.24% from 7.32% the previous week, marking a second straight weekly decline but still close to the highest level since November 2023. By comparison, the mortgage rate in the same period last year was only 6.17%. Notably, the US 30-year mortgage rate has remained above 7% for six consecutive weeks, the longest streak since late 2023. Although the rate has retreated from the three-year high of 7.4% touched in mid-October, it is still more than one percentage point higher than at the start of the year, continuing to worsen homebuyers' affordability. High rates continue to suppress housing demand, monthly mortgage payments rise significantly The US housing market is mired in a dilemma of high home prices and high interest rates reinforcing each other. On one hand, persistently elevated mortgage rates make it difficult for many potential buyers to afford home-purchase costs; on the other hand, homeowners who already hold low-rate mortgages are reluctant to sell their existing homes to avoid higher financing costs after trading up, further limiting the supply of homes on the market. According to relevant calculations, for the purchase of a US$500,000 home, assuming a 20% down payment, the current monthly mortgage principal and interest payment is about US$333 higher than at the end of February this year, when US mortgage rates briefly fell below 6%. For the purchase of a US$1 million home, under the same down payment ratio, the monthly mortgage payment is about US$666 higher than at the end of February. Data from real estate brokerage Redfin show that the median monthly mortgage payment for US homebuyers is currently hovering near a record high. Mike Fratantoni, chief economist at the Mortgage Bankers Association (MBA), said US mortgage rates are unlikely to decline significantly for some time. "We do not expect to see meaningful relief in mortgage rates over the forecast horizon." He noted that mortgage rates currently near a three-year high are causing a marked slowdown in home sales, mortgage originations and commercial real estate market activity. Meanwhile, the Federal Reserve decided to keep rates unchanged at its October monetary policy meeting, and the market still expects it to raise rates further at its final meeting this year. That also means the US housing market may struggle to get meaningful rate support in the near term. US home prices fall for first time in more than three years, sellers far outnumber buyers As housing affordability continues to deteriorate, increasingly obvious signs of price cuts are emerging in the US real estate market. Data released by Redfin on Thursday show that the median US home sales price fell for the first time in more than three years, reflecting that high home-buying costs are eroding sellers' pricing power. At the same time, the supply-demand relationship in the housing market has also changed markedly. Redfin data show that in September this year, sellers on the US housing market outnumbered buyers by nearly 63%, the largest gap since relevant statistics began in 2013. The data indicate that although some existing homeowners remain reluctant to sell, the number of people willing to buy has fallen even faster, gradually giving buyers more leverage in price negotiations. Asad Khan, senior economist at Redfin, said there is a notable contradiction in the current US housing market: from a supply perspective, buyers are facing one of the most favorable market environments in years, but high home-buying costs leave many unable to take advantage of it. "Ironically, from a supply standpoint, this may be one of the most buyer-friendly market environments in years," Khan said. "But it comes at a time when home-buying costs are so high that fewer and fewer people can afford a home." New home sales remain weak, builder confidence falls to 14-year low High mortgage rates are not only hitting the existing-home market but also weighing on US new home sales. Data released by the US Census Bureau on Tuesday showed that sales of new single-family homes fell 0.6% month-on-month in September, indicating continued weakness in housing demand. New home prices are also under downward pressure. The data show that in the nine months of data published so far for 2026, the median US new home sales price has declined in seven months. Facing weak sales, more and more homebuilders are being forced to attract buyers through price cuts and other incentives, but this is further squeezing corporate profit margins. According to the housing market index compiled jointly by the National Association of Home Builders (NAHB) and Wells Fargo, US homebuilder confidence has fallen to a 14-year low, affected by factors including high mortgage rates, persistent labor shortages and rising building material costs. The difficulties facing builders also reflect that the weakness in the US housing market is not simply caused by a lack of supply, but that high financing costs are continuously suppressing market activity from the demand side. Short-term recovery still faces challenges Overall, although US mortgage rates have edged lower for two consecutive weeks, financing costs above 7% still pose obvious pressure on the housing market. For potential homebuyers, high home prices combined with high rates keep monthly mortgage burdens near record highs; for sellers, a shrinking pool of buyers means homes may take longer to sell, adding to price-cut pressure. In addition, slowing new home sales, builder confidence at a 14-year low, and sellers significantly outnumbering buyers in the existing-home market all indicate that the US housing market still lacks momentum for a sustained recovery. With the Federal Reserve potentially raising rates further in the near term and mortgage rates unlikely to fall significantly, the US housing market may continue to face the dual pressure of weak demand and price adjustment.