Mortgage & Housing Update 9/26/2025

The Fed cuts rates—and mortgage rates go up? Sounds completely backwards, right? Well, yes, it would be—if that’s how things actually worked. But it’s not. And today, I’ll explain why, along with what’s really driving mortgage rates, what’s happening with home sales, and why October could be the very best time to buy a home in 2025.

Welcome back to my Mortgage & Housing Update. 🤩 My name is Pauline Lee, I’m a Licensed Real Estate and Mortgage Loan Officer, and I help buyers make smart, confident decisions. If you find this update helpful, make sure you hit like and subscribe so you don’t miss next month’s breakdown. I encourage you to get pre-approved.

Pauline Lee, Licensed MLO nmls# 674113 | pauline@indmortgage.com | (508) 525-5415 | https://www.indmortgage.com/mortgagehousingupdate20250725

Highlights

On September 17, the Fed cut short-term interest rates by 25 basis points, bringing the target range down to 4.00-4.25%. And yet, average 30-year mortgage rates actually rose after the announcement, moving from 6.13% to 6.37%. Here’s what really happened: markets anticipate change. Mortgage rates follow the stock and bond markets, not the Fed directly. Leading up to the Fed meeting, rates had already dropped significantly from 6.53% to 6.13%, because of weaker jobs data and downward revisions to employment. Investors expected the Fed to cut, so when they finally did, that news was already “baked in.”

In August, new home sales spiked—to an annualized pace of 800,000 units. That’s the highest level since January 2022 and a massive 21% increase from July. Most of those gains came from the South, which accounted for about two-thirds of all new home sales. So, what’s behind this surge? It wasn’t mortgage rates – those didn’t fall meaningfully until September. Instead, builders got aggressive with sales incentives and price adjustments, clearing out inventory they had completed over the summer.

Meanwhile, existing home sales slipped slightly, down 0.2% in August to an annualized pace of 4 million units. The median sales price eased by 0.7% to $423,000. Existing homeowners are still locked into historically low mortgage rates, so fewer are listing their homes. But with rates easing in September, I expect we’ll see a bump in existing home sales when those numbers come out.

The best time to buy is the week of October 12th through 18th. Why? Because inventory is still high coming out of the summer, but buyer demand cools off as families settle into school routines and the holidays approach. That means more homes to choose from and less competition – a double win for buyers.

Here’s the bottom line: Mortgage rates are still higher than the pandemic lows, but they’re easing compared to where we started the year. Builders are making deals, inventory is ticking up, and mid-October historically gives buyers an edge..

That combination creates opportunity—if you’re prepared.

👉 Don’t wait until the perfect home slips away—because once it’s gone, it’s gone. Take the first step today by getting pre-approved. It costs you nothing to have that conversation, but it could save you thousands when it’s time to negotiate. 📲 Let’s connect for a no-pressure consultation. Whether you’re ready to buy today or just planning ahead, I’ll help you map out your homeownership strategy.

 👉 Schedule your free call using the link in the description.
👍 Like, Subscribe, and leave a comment if you have questions.

🤩 I am Pauline Lee, a real estate professional, with an expertise in financing. Connect with me for a consultation and to get mortgage ready. I encourage you to get pre-approved.

Pauline Lee, Licensed MLO nmls# 674113 | pauline@indmortgage.com | (508) 525-5415 | https://www.indmortgage.com/mortgagehousingupdate20250725