Mortgage rate uptick leaves summer market on standby
Mortgage applications are up, but a rise in rates combined with job loss concerns and tariff uncertainty could kill the momentum.
Key points:
- Overall mortgage rate activity was up 9.4% as buyers locked in rates that drifted lower over the past few weeks.
- But mortgage rates are now back on the rise following a strong June jobs report and continued tariff uncertainty.
- Home touring and Google searches are up, creating an uneven market in which some neighborhoods are seeing more demand than others.
A mixed bag of economic signals continues making it difficult to determine which direction the real estate market is heading this summer.
The good news for agents? Mortgage applications continue to tick up, according to the Mortgage Bankers Association. Overall activity rose 9.4% in the last week, with buyers and those looking to refinance taking advantage of the recent drop in mortgage rates.
However, that momentum may not last. The average rate began rising this week following a strong June jobs report and renewed uncertainty about tariffs, both variables that have thrown cold water on a possible July interest rate cut.
As of July 10, the 30-year fixed-rate mortgage averaged 6.72%, according to Freddie Mac, up from 6.67% the week before. Mortgage News Daily, which uses a different set of criteria to identify the daily rate, pegged it at 6.79% on July 10.
Will applications translate to sales?
Despite the rise in mortgage applications, pending sales numbers remained sluggish in June — a sign that more contracts are falling through, according to Lisa Sturtevant, chief economist at Bright MLS. This trend suggests lower mortgage rates may not be enough to bring buyers off the sidelines.
"Mortgage rates may come down modestly over the coming months but other economic headwinds — including the impact of tariffs on the prices of consumer goods, weaker labor market conditions and rising consumer debt — could be what continue to hold the housing market in the second half of 2025," Sturtevant said.
Employment worries add strain
Some of those other economic concerns are showing up in Fannie Mae's Home Purchase Sentiment Index (HPSI), which dropped 3.7 points to 69.8 in June.
Job loss concerns in particular rose significantly, with the share of employed consumers who said they are not worried about losing their job dropping 13 percentage points to 41% — the second-lowest level in the history of the HPSI.
Potential buyers are lurking
But demand is still out there, with touring activity and Google searches for home sales up this year, according to Redfin's rolling four-week report. These discrepancies have led to an uneven market, sometimes even within the same areas.
"Some homes are moving fast, others are seeing multiple price reductions," said James Gulden, a Redfin Premier agent in Boston.
"It's not location or price-tier specific; the mixed results permeate in every corner of the market," Gulden noted in a Redfin news release. "Prices are still as high as they have ever been, but with homes sitting longer, the market is slowly turning in buyers' favor."
Generally speaking, the Northeast and Midwest continue to see stronger demand and lower inventory, while the South and West have more inventory and less demand.
"Though the market remains competitive in parts of the country, the broader trend is moving towards more buyer-friendliness," said Hannah Jones, senior economic research analyst at Realtor.com.