MW Mortgage rates are down, but it's not about to get cheaper to buy a house

By Aarthi Swaminathan

'Uncertainty is the latest buzzword in the housing market,' economist says

Mortgage rates are falling, but that doesn't necessarily mean buying a home is about to get cheaper.

The 30-year fixed-rate mortgage fell 2 basis points to 6.62% as of April 10, and was down from an average of 6.88% from the same time a year ago, according to weekly data from Freddie Mac.

The drop in rates was surprising, but not entirely unexpected. The 30-year rate has been bouncing up and down in recent days as financial markets digest the Trump administration's rapid changes on trade policy and weigh how they could affect the U.S. economy.

The average rate on a 30-year mortgage had initially jumped 10 basis points on April 9, before falling three points on Thursday, according to a separate survey of mortgage lenders by Mortgage News Daily.

"All of the back-and-forth over the last week has left the market and consumers reeling, but mortgage rates have held relatively steady so far," Hannah Jones, a senior economic research analyst at Realtor.com, said in a statement.

"Uncertainty is the latest buzzword in the housing market and economy more generally as consumers try to navigate the impact of recent tariff-policy changes," she added.

Read more: Homeowners and home buyers seize a brief - but steep - drop in mortgage rates

Even if rates drop, it won't necessarily meaningfully affect home-buying costs. Home prices still remain elevated, with the median sale price of a home up 2.9% from last February to $424,430 this year, according to data from Redfin $(RDFN)$, a real-estate brokerage.

Tariffs are still a big unknown when it comes to the future of home prices. The Trump administration's tariffs on imported goods are expected to push home-construction costs up by as much as 6% over the next 12 months, according to an analysis by Cotality in February.

"Already, the average cost of new construction in the U.S. is $422,000," Cotality's report stated. "Adding in potential material cost increases from the tariffs would add between $17,000 and $22,000 to that price tag."

Speaking prior to President Donald Trump's partial 90-day pause on global tariffs, Matt Saunders at John Burns Research and Consulting told MarketWatch that he expects a 5% increase in the average cost of building a home. He added that some builders might choose not to pass on the higher costs to consumers due to how price-sensitive home buyers are.

On the flip side, early data indicated that home buyers might be getting spooked and potentially pull back in the months ahead due to concerns over their job security as recession fears remain.

In its most recent monthly survey on consumers' attitudes towards home-buying, Fannie Mae found that 32% of employed people expressed concerns about losing their job, up from 23% the previous month. That figure "highlights the uncertainty that many respondents feel around their job security," Realtor's Jones said.

(Realtor.com is operated by News Corp subsidiary Move Inc.; MarketWatch publisher Dow Jones is also a subsidiary of News Corp.)

Amid the volatility, renting remains the much cheaper option for now. In a separate study, Redfin found that Americans need an income of $64,160 per year to comfortably afford a lease on an apartment, but to buy a median-priced home, they would need $116,600.

The analysis assumed housing costs are affordable if the person spends no more than 30% of their income. The company also assumed the median asking rent to be about $1,600 and the median home-sale price to be around $424,000.

-Aarthi Swaminathan

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April 10, 2025 13:03 ET (17:03 GMT)

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