By Shaina Mishkin

Mortgage rates are headed lower, but that might not matter for would-be home buyers.

Mortgage News Daily on Tuesday pegged the 30-year fixed mortgage rate at 6.17%, the lowest since the mid-September drop in the run-up to that month's Federal Reserve meeting. The 10-year Treasury yield, with which mortgage rates often move, fell Tuesday afternoon to 3.961%, its lowest level in just over a year, according to Dow Jones Market Data.

That decline might not do much to move buyers into action. Homebuying sentiment in September, the most recent month available, remained relatively low, with 73% of respondents telling Fannie Mae it was a bad time to buy.

Typically, lower mortgage rates results in more housing demand, PulteGroup President and CEO Ryan Marshall said on a Tuesday conference call, Barron's previously reported.

The same can't be said for the recent drop, which shaved more than 0.75 percentage point off mortgage rates since the end of May, according to Mortgage News Daily data. "The buyer response to the decrease in interest rates was more muted than we experienced in other periods of rate declines," PulteGroup's Marshall said about the builder's third quarter ended Sept. 30.

Buying a house is more costly than it was before the pandemic. The cumulative effect of fewer buyers who can afford it was the most common explanation for why home price growth stalled and sales remained slow this spring in a Fannie Mae survey of economists in the third quarter.

But it wasn't the only reason. The second most commonly cited explanation was a dampening of demand "due to heightened macroeconomic uncertainty, significant stock market fluctuations, and geopolitical events."

That was a limiting factor for some buyers in PulteGroup's third quarter. "There is a clear offset if rates are coming down because the economy is slowing and people are worried about their jobs," Marshall said on the call. "I believe that is the scenario we are experiencing right now."

The prospect that buyers are sidelined not by costs but uncertainty has pressured shares of public home builders in recent weeks. The iShares U.S. Home Construction exchange-traded fund was down about 3% in October through Monday's close, though the fund was moving higher in late Tuesday trading.

Home affordability will improve some in the coming years, while the job market softens, says Mike Fratantoni, the Mortgage Bankers Association's chief economist.

The trade group foresees 30-year fixed mortgage rates remaining above 6% in the coming years, with home prices in 2026 ending 0.3% lower than the year prior.

"At the individual buyer level, I think the uncertainty is the bigger issue," says Fratantoni. "If you have someone who's who doesn't feel stable in their job, they're probably not going to go through with the home purchase."

Write to Shaina Mishkin at shaina.mishkin@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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October 21, 2025 15:34 ET (19:34 GMT)

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