Mortgage rates took another small dip this week, hitting their lowest point in 10 months. But before anyone gets too excited, they're still pretty much stuck in the same range they've been bouncing around in for weeks.

Freddie Mac reported Thursday that the average 30-year mortgage rate dropped to 6.56% from last week's 6.58%. That's technically the lowest it's been since late October, when it sat at 6.54%. For comparison, rates were averaging 6.35% this time last year.

If you're looking at a 15-year mortgage—which a lot of people use for refinancing—those rates didn't budge at all. They stayed put at 5.69%, compared to 5.51% a year ago.

Housing Market Still Stuck in Neutral

These elevated mortgage rates have been a huge drag on the housing market since early 2022. That's when rates started climbing from those crazy-low pandemic levels that made everyone think they could afford a house.

For most of 2025, 30-year mortgage rates have been hanging around their yearly high of just over 7%, which hit back in mid-January. The good news is they've been trending downward for about six weeks straight now.

But here's the thing—even though rates are dropping, it hasn't really helped home sales pick up. Sales are still pretty sluggish this year, and they were already at their lowest point in nearly 30 years back in 2024.

There's actually a related story floating around about home builders slashing prices by $20,000 because their confidence hit rock bottom. That should tell you something about where the market stands right now.

What's Driving These Rate Changes

Mortgage rates don't just move randomly. They're influenced by a bunch of different factors, from Federal Reserve decisions to what bond market investors think is going to happen with the economy and inflation.

The main thing lenders look at is the 10-year Treasury yield, which they use as a guide for pricing home loans. That yield was sitting at 4.21% on Thursday afternoon, down from 4.24% the day before.

The yield has been mostly dropping since mid-July as bond traders try to figure out what's going on with inflation data, job market numbers, and how Trump administration tariffs might affect Fed policy decisions.

Fed Chair Hints at Rate Cuts

Federal Reserve Chair Jerome Powell gave a pretty important speech last week where he basically said the central bank might cut rates soon, even though inflation is still a concern.

Powell pointed out that there are risks on both sides—unemployment could rise, but inflation could also stay stubbornly high. He noted that with hiring being pretty weak, the job market might get worse. That could mean the Fed needs to adjust its approach.

The central bank has been hesitant to cut interest rates because they're worried Trump's tariffs could push inflation higher. But recent data showing hiring slowed last month has people speculating that the Fed will cut its main rate next month.

Rate Cuts Don't Guarantee Lower Mortgage Rates

Here's where things get tricky. The Fed doesn't actually set mortgage rates directly. And while a Fed rate cut might help the job market and overall economy, it could also fuel inflation. If that happens, bond yields could go higher, which would push mortgage rates up instead of down.

Lisa Sturtevant, chief economist at Bright MLS, put it pretty bluntly: "While the Fed is likely to cut interest rates at their September meeting, it is not at all certain that mortgage rates are going to come down. As a result, buyers and sellers are still going to be cautious and the market could remain gridlocked this fall."

That's not exactly encouraging news for anyone hoping to buy or sell a house anytime soon.

Home Sales Still Looking Weak

New data on contract signings suggests the housing market isn't going to perk up anytime soon. The National Association of Realtors reported Thursday that pending home sales fell 0.4% in July compared to the previous month.

There was a tiny bit of good news—pending sales were up 0.7% compared to July last year. But that's not exactly a reason to celebrate.

The thing about pending home sales is there's usually a one or two month lag between when someone signs a contract and when the sale actually closes. So these numbers give us a preview of what completed home sales are going to look like in the coming months.

The Bottom Line

Until rates drop significantly more—or people just get used to these higher rates—the housing market is probably going to stay pretty quiet. That means fewer homes changing hands, which affects everything from construction jobs to moving companies to furniture sales.