Mortgage rates drift lower ahead of Fed’s December meeting
Economists say the market “widely expects” another rate cut — but the central bank will be making its next decision without key jobs and inflation data.
Key points:
- The 30-year fixed-rate mortgage averaged 6.19% this week, bouncing around the lowest levels of the year.
- Though the Fed lacks recent government-released labor market and inflation data, many investors still expect the central bank to cut short-term interest rates when officials meet next week.
- Other real estate data indicates that the seasonal winter slowdown is underway as supply and demand both weaken.
While most consumers are turning their attention to the end-of-year holidays, a key economic decision slated for next week may set the tone for real estate in early 2026.
Investors are increasingly confident that the Federal Reserve will cut short-term interest rates by 25 basis points when it meets Dec. 9-10. That sentiment is showing up in mortgage rates, which have drifted down in recent days.
If the Fed does make the anticipated cut, it would be the central bank's third-straight 25-point cut — and third total of 2025 — as concerns about a slowing U.S. economy persist.
"A December rate cut, which the market widely expects, could take further pressure off of mortgage rates as the year comes to a close, boosting buying power as the new year approaches," said Hannah Jones, senior economic research analyst at Realtor.com.
Next week's Fed meeting will also provide economic projections, which should offer some insight into where officials think the economy is heading based on the economic data they have.
30-year rate falls below 6.2%
The 30-year fixed-rate mortgage averaged 6.19% this week, according to Freddie Mac. That's down from 6.23% the previous week and is among the lowest levels that mortgage rates have reached in 2025. One year ago, the rate averaged 6.69%.
Mortgage applications are meanwhile showing mixed results, according to the Mortgage Bankers Association. The seasonally adjusted rate was up 3% this week, but was also down at various points in November.
Fed to meet without recent jobs, inflation data
Fed officials will head into their December meeting without a solid picture on where things stand with the job market and inflation. The Bureau of Labor Statistics' November jobs and inflation reports have both been delayed until mid-December as a result of the federal government shutdown.
Other sources offer partial views on the health of the labor market. According to the payroll processing firm ADP, the number of private employment jobs fell by 32,000 in November. ADP noted that November hiring was particularly weak in manufacturing, professional positions and construction. However, Department of Labor data released on Dec. 4 indicated that initial jobless claims fell to a three-year low last week.
These conflicting data points make it unclear whether the labor market is continuing to soften or is in a holding pattern.
Weaker supply, demand in the final weeks of 2025
When assessing other real estate metrics, it appears that the winter hibernation has arrived. Housing inventory is losing momentum, up just 5.1% compared to a year ago — the smallest year-over-year increase in nearly two years, according to Redfin data. Year-over-year pending sales for the four weeks ending on Nov. 30 were down 2.6% — the biggest drop in eight months.
Delistings remain elevated as many sellers appear unwilling to settle for a lower price. However, sellers continue to outnumber buyers, which provides some opportunities for those shopping around for a new home, according to Carlos Castillo, a Redfin Premier agent in Los Angeles.
"House hunters may be able to find a deal because there are more sellers than buyers, but I'm advising buyers to be strategic," Castillo said. "For instance, buyers can ask for concessions and offer less than the asking price, but don't lowball too much. Around 4% less than list price is pretty standard in the Los Angeles area right now."