By Mariapaula Gonzalez

Mortgage rates dipped as the housing market shapes up for a slower summer season. Buyers and sellers are holding out for significantly lower rates -- even if economists say that's unlikely.

The average rate for a 30-year mortgage was 6.81% over the past week, down slightly from 6.84%, which was the lowest level since mid-May, according to data from Fannie Mae.

Mortgage rates have remained elevated this year, with an average rate of 6.81% since January, according to Freddie Mac. The levels are nearly identical to a year ago.

"More available inventory to choose from, coupled with this week's decline in mortgage rates, could be the spark to get potential home buyers off the sidelines," Sam Khater, Freddie Mac's chief economist, said in a statement.

Slower economic growth, financial market volatility amid tariff uncertainties, and current geopolitical conflict have also led to a decline in borrower confidence.

Applications for home purchase loans decreased a seasonally adjusted 3% last week, according to survey results from the Mortgage Bankers Association. High rates weigh on purchasing decisions, which aren't favorable for buyers or owners looking to refinance.

For buyers, this remains a time to be "opportunistic," says Keith Gumbinger, the vice president of mortgage website HSH.com. Right now, there's not as much pressure to make a decision on a house or to speed up negotiations. But others are waiting on the sidelines with hopes of better market conditions. "If a buyer can overcome today's still-challenging conditions, they should still be prepared to move quickly if a house they love becomes available," he told Barron's.

Home prices are expected to remain high, which could keep buyers and sellers gridlocked, dragging on sales. With limited buyers, sellers might have to cut their asking prices. For most of them, "this might mean giving up a portion of the rapid home value appreciation seen in recent years," says Gumbinger.

One place buyers can find discounts: the market for newly built homes. Sales have been strong, particularly in the South and West, thanks to incentives offered by builders. In June, 37% of builders cut prices while 62% offered some sort of sales incentive, the NAHB reported Tuesday.

Changing mortgage rates could also impact how much builders buy down. Despite the high use of these incentives, builders prefer mortgage rates in a "sweet spot" of about 5.5%, says Olu Sonola, head of U.S. Economic Research at Fitch Ratings.

Elevated rates have also dampened home builder confidence. Builder sentiment declined to 32 in June, hitting its third lowest reading since 2012, and was down two points from May. The index is based on a monthly survey of single-family builders who are asked to rate present and expected sales of new homes for the next six months and traffic of prospective buyers.

There are also factors beyond the overall economy that could influence mortgage rates -- specifically, investor interest in purchasing mortgage-backed securities, says Selma Hepp, chief economist at property analytics company Cotality.

Economic uncertainty and the risk that homeowners might pay off their loans early have increased investor concerns. Even if the 10-year Treasury yield -- an indicator of where mortgage rates are heading -- remains steady, rates can still increase because of investor sensitivity to taking on higher risk by making mortgage payments on behalf of borrowers.

For now, investors and consumers are still looking for signals on what's next, with the Federal Reserve expected to keep interest rates unchanged at today's meeting.

The market will have to get used to higher mortgage rates, Sonola says. "It's not coming back to the threes or the fours that we had before the pandemic," he says.

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June 18, 2025 12:41 ET (16:41 GMT)

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