Mortgage rates just dropped again, hitting 6.58% for a 30-year fixed loan, the lowest mark in 2025 so far. This is the fourth week in a row we have seen rates fall, and they haven’t been this low since October 2024. It is a big shift, especially after months of hovering around 7% or higher.

For anyone keeping an eye on the mortgage market, this is a big deal. But home sales are still slow. Lower rates usually get people moving, but that hasn’t happened yet. High prices and other economic pressures are holding buyers back.

However, the housing market is not frozen. But it is far from hot. Right now, the average home price sits at $422,400. That is a steep climb from a few years ago, and it is one of the main reasons buyers, especially first-time ones, are sitting on the sidelines. The median age for first-time buyers is now 38, and they make up only 24% of the market, which is the lowest share ever recorded.

Paul / Unsplash / In July 2025, there were 1.55 million homes for sale across the U.S., a 16% bump from last year.

That gives buyers more room to breathe and more leverage to negotiate. It also means homes might not fly off the market in a day, like we saw in the early pandemic frenzy.

Still, even with more options and lower mortgage rates, many buyers just aren't pulling the trigger. Why? The math still doesn't work for a lot of people. Even at 6.58%, monthly payments on a $400,000 home are steep when prices are high and incomes have not kept pace.

Refinancing Surges as Homeowners Jump on Savings

On the flip side, homeowners with existing mortgages are jumping at the chance to refinance. If your rate is over 7%, dropping into the mid-6s can mean serious monthly savings. That is why refinance applications surged 23% in just one week. People are not buying, but they are definitely looking to cut their costs.

Experts say these rates might hang around for a while. Projections show mortgage rates staying near 6.5% through the end of 2025, with small drops possible in 2026 or 2027.

What to Expect Next From the Dipping Mortgage Rates?

Freepik / Mortgage rates don’t just move with the Fed. They are tied to the 10-year Treasury yield, inflation expectations, and labor market trends.

The next few weeks will be important. There are key economic updates coming that could shake things up. On September 5, we will get fresh unemployment numbers. Then, on September 11, a new inflation report drops. And on September 17, all eyes will be on the Federal Reserve’s next move. If the Fed cuts rates, markets could shift fast. But this comes with a catch: It doesn’t always mean mortgage rates will follow.

Right now, inflation is easing, but global uncertainty and economic risks are still in play. So, even if the Fed acts, lenders might stay cautious.

However, regional price shifts also play key roles. Some cities are finally seeing home prices soften. In fact, 33 of the 50 biggest metro areas posted year-over-year price declines. But not everywhere is cooling. New York City, for example, is still on fire, with prices up 7.4% from last year. Local markets are moving at their own pace.