Rates Move Closer to Zillow’s Year-End Forecast

Mortgage rates fell as the probability of a September rate cut increased. Federal Reserve Chair Jerome Powell’s remarks at the Jackson Hole symposium on August 22 indicated potential risks to the labor market, noting that a decrease in demand for workers has not yet led to higher unemployment due to a shrinking supply of workers. Additionally, he suggested that tariffs may only cause a one-time price increase.

Further declines are unlikely, according to Zillow’s forecast. Zillow anticipates that mortgage rates will stabilize in the mid-6% range by year-end.

Impact on the Housing Market

Even with modest rate relief, affordability remains a major hurdle for homebuyers. More sellers have come off the sidelines this year, but the buyer pool has not kept pace, leading to a growing number of listings and record price cuts. In fact, 27.4% of active listings had price reductions—a new high in Zillow’s data since 2018.

For buyers who can navigate today’s affordability constraints, the market has become more favorable. There’s less competition, more inventory, and greater negotiating power. Zillow’s market heat index shows 27 major metro areas have shifted into neutral or buyer’s market territory — three more than last month — and a clear break from the seller-dominated markets of recent years.