Homebuyers Get a Small Break as Rates Edge Down

After months of stubbornly high mortgage rates, buyers finally got a little relief. The average 30-year fixed-rate mortgage dropped to 6.87% this past week, its lowest point so far in 2025. It’s not a huge drop from last week’s 6.89%, but for anyone waiting on better rates, even a small shift can help.

This dip comes at a time when home prices are still cooling. According to Realtor.com, the median home list price is down 1.2% compared to last year. Sellers, feeling the pressure of high rates keeping buyers hesitant, have been cutting prices more often—38% more listings saw price reductions than this time last year. Meanwhile, inventory is growing, with more homes hitting the market for the fifth straight week. Side note - this is more a nationwide trend, not necessarily true for the New River Valley.

Despite these shifts, the bigger picture remains uncertain. Inflation ticked up in January, pushing up prices on everything from rent to groceries—egg prices alone have jumped a staggering 53% due to supply shortages. Normally, rising inflation would push mortgage rates up, but for now, rates have managed to defy expectations and slip lower instead.

That doesn’t mean rates are about to drop significantly. Economist Joel Berner warns that inflation could keep the Federal Reserve from lowering interest rates anytime soon, meaning mortgages may stay near current levels for a while. “The days of sub-4% mortgage rates are over,” he says, and buyers who expected to refinance to a lower rate soon may be waiting longer than they thought.

On the bright side, homebuyers are starting to feel a little more confident about the market. More homes on the market, slower price growth, and even a slight rate dip could make this spring a much better time to buy than last year.

Source: Freddie Mac, Realtor.com, Labor Department