Shutterstock While the 30-year mortgage rate fell for the first time in two months, to 7.32%, it remains a barrier to would-be buyers who still feel priced out. October 22, 2026 4 mins Key points: The 30-year fixed-rate mortgage averaged 7.32% this week, the first weekly decline since August, according to Freddie Mac data. Investors are widely expecting the Fed to hold rates steady when it meets next week following a rate hike at its September meeting.
Though homebuyers are gaining negotiating power, elevated rates are keeping many on the sidelines — and appear to be similarly discouraging more sellers from putting their homes on the market. Homebuyers got a bit of a respite over the past few days as a quieter week for incoming economic data paved the way for mortgage rates to drift down. First week-over-week rate drop since August The 30-year fixed-rate mortgage averaged 7.32% this week, down from 7.4% the week before , according to Freddie Mac .
It's the first weekly decline for 30-year rates since August and the biggest one-week drop since July. With 10-year U.S. Treasury bonds dipping below 5% Thursday morning, mortgage rates are likely to continue trending down in the coming days.
Mortgage News Daily , which uses a different set of metrics in gauging rates, also pegged the 30-year at 7.32% on Oct. 22, around the lowest reading in several weeks. The Treasury yield's decline doesn't necessarily bode well for the wider economy, however. Investors appear to be viewing bonds as a safer investment alternative amid concerns about artificial intelligence and rising oil prices as the U.S.-Iran war drags on .
Fed expected to hold rates steady at next week's meeting Given the current U.S. and global economic turmoil, investors are broadly expecting the Federal Reserve's Federal Open Market Committee to hold off on raising short-term interest rates when it meets Oct. 27-28. According to the CME Group's FedWatch tool, investors believe there is a 95% probability of a rate hold next week following September's 25-basis-point increase , though the tool also indicates there is a nearly 75% chance of some sort of rate hike at the Fed's December meeting. The market slowdown continues Though this week's decline in rates may bring relief for some, the drop has come too little, too late to have much of an impact on the fall housing market, according to Realtor.com Senior Economist Anthony Smith.
"The damage to the fall housing market is already done," Smith said, referring to last month's steep drop in pending sales . "Buyers may be gaining power at the negotiating table as the pace of sales slows, but that leverage has come at the expense of affordability." That slowdown is showing no sign of letting up. Overall mortgage applications were down 5.3% for the week ending Oct. 16, according to the Mortgage Bankers Association (MBA).
The purchase index fell 18% year-over-year, while refinance applications dropped 59% for the same period. "It is very clear that the higher mortgage rate environment has cooled the housing market this fall," said Joel Kan, MBA's VP and deputy chief economist. Potential homesellers appear to be taking the hint: New listings fell 1.4% compared to the week before and dropped 2.7% year-over-year, according to an Oct. 22 report from Redfin .
Meanwhile, inventory continues to grow slowly as homes sit on the market, with total inventory up 0.1% week-over-week and up 2.1% year-over-year. Home price growth also slowing Various data measurements indicate home prices are either flat or slightly down compared to a year ago: ATTOM's Q3 U.S. Home Affordability Report , for example, shows a 2% year-over-year drop while Redfin and Zillow estimate that home prices are up 0.2% and 1.2% year-over-year, respectively.
Mike Simonsen, chief economist at Compass, pegged pending sale prices at 1.2% below last year but noted that closed sale prices have remained basically flat despite elevated mortgage rates. "Home sellers have, in the last four years, chosen to sell fewer homes to match the lower quantity demanded," Simonsen said. "Homeowners are really hesitant to sell at a loss if they don't have to." Meanwhile, buyers who took advantage of the pandemic-era ultra-low mortgage rates also seem to be in no mood to trade what they have.
An Oct. 22 report from Realtor.com estimates that 65.6% of all mortgages had a rate of 5% or lower in Q2, down slightly from 66.7% the previous quarter . The mortgage rate lock-in is easing, but progress is slow because current elevated rate conditions are making a move harder to justify, said Hannah Jones, senior economist at Realtor.com. Still, "even in today's high-price, high-rate market, homebuying activity around major life events, such as having kids, a job change, or a divorce, keeps the market in motion," Jones said.
Source: RealEstateNews.com
