Real estate technology company Zillow reports that the 30-year fixed-rate mortgage (FRM) is holding at its highest level in a year. And the firm has a major prediction: “Newly pending listings, a forward-looking measure of demand, fell 2.6% from a year ago, a sign that the slowdown could continue through the remainder of the year,” Zillow wrote.
“Mortgage rates moved higher for the 6th day in a row on Tuesday and to the highest levels since January, 2025,” wrote Matthew Graham of Mortgage News Daily (MND). “The average top-tier 30-year fixed rate is up to 7.22% and the most prevalently-quoted top-tier rate is 7.25%.”
“Over the past 6 days, the average is up 0.33%, which is the most abrupt jump since October 2024.”
The weekly FRM is 6.76%, according to Freddie Mac.
“Aspiring buyers should remember shopping around for the best mortgage rate and getting multiple quotes can potentially save them thousands,” said Freddie Mac’s chief economist Sam Khater.
Recent market swings stem partly from how shifting economic reports and fluctuating oil costs might influence Federal Reserve decisions. Investors widely expect the Fed to raise interest rates during the Sept. 16 scheduled policy announcement.
“All that to say, a Fed rate hike … does not necessarily mean higher mortgage rates,” Graham wrote. “In fact, some would argue that an absence of a Fed rate hike could be the worse outcome for longer-term rates.”
“Speculation aside, there is more to a Fed announcement than a mere ‘cut/hold/hike’ decision, and markets will take all of it into consideration before committing to a big reaction.”
Zillow reports key housing market swing
Following an unprecedented boom, residential home construction is losing steam.
Zillow research reveals that single-family home completions dropped for a third consecutive year in 2025, with building permit volume falling further below pre-pandemic norms.
Closed sales in August primarily reflect July purchase agreements, when higher borrowing costs had already scared off many potential buyers.
“The typical U.S. home value rose 1.3% from a year ago to $369,678, according to the Zillow Home Value Index, and the monthly mortgage payment on the typical home was 2% higher than last year,” Zillow wrote.
“Rents are climbing, too, up 2.5% year over year to $1,948 nationwide, giving prospective buyers little relief on either side of the rent-versus-own equation,” Zillow continued.
“That annual rent growth figure is also reaccelerating, up from 2.3% last month and 2% a year ago, suggesting the rental market is absorbing some of the demand that has shifted away from the for-sale market.”
Zillow clarifies home construction slowdown
Nationwide residential permit volume reached 1.42 million over the 12-month period through July 2026, Zillow reported, marking a 1.7% drop compared to the previous year.
“Compared with the pre-pandemic trajectory from 2016 through 2020, permitting is running 19.4% below where it would have been if that trend had held,” Zillow wrote. “Permitting has fallen year over year for 44 consecutive months and is now the furthest below the pre-pandemic trend line that it’s been this decade.”
“Bright spots are that builders are completing homes more quickly as the pandemic-era backlog clears, and favoring smaller homes that are more affordable for financially stretched buyers,” Zillow added.
“The median detached home completed in 2025 took six months to build, a month faster than at the height of the supply-chain crunch in 2022 and 2023.”
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Sluggish demand is prompting builders to slow construction, most notably in their core high-growth markets.
“That’s an understandable reaction to today’s conditions,” said Kara Ng, senior economist at Zillow. “But the housing shortage that drove the building boom is still very much intact. The concern is that when conditions improve and buyers return, the thinner pipeline could mean a tighter market that drives up prices.”
Redfin addresses expected Fed action
Following last week’s inflation report, Wall Street expects a Federal Reserve rate hike on Sept. 16.
“In August, the Consumer Price Index for All Urban Consumers rose 0.4 percent, seasonally adjusted (SA), and rose 3.4 percent over the last 12 months, not seasonally adjusted (NSA),” wrote the Bureau of Labor Statistics. “The index for all items less food and energy rose 0.3 percent in August (SA), up 2.4 percent over the year (NSA).”
The expected interest rate move in response to inflation is a standard central bank reaction, but how an increase will impact mortgage rates remains unclear.
“Following last week’s inflation data, markets have priced in a hike with over 90% probability and almost all Wall Street economists switched their call from ‘hold’ to ‘hike,’” Redfin wrote. “The economic case for a hike feels significantly less certain than markets have priced.”
But the rising 10-year Treasury bond yield has a more direct impact on mortgage rates than shifts in interest rates.
“Whatever they ultimately decide to do, the reaction in bond markets is hard to predict because it depends on the policy action itself, the forward projection, and whether markets believe the Fed is serious about 2% inflation,” Redfin wrote.
Related: Zillow reports crucial housing market shift for buyers
