Mortgage Rates See Biggest One-Day Drop in Over a Year

If you’ve been keeping an eye on mortgage rates, you may have noticed some exciting news: rates just saw their sharpest one-day decline in over a year. On Friday, the average 30-year fixed mortgage dropped by 16 basis points, landing at 6.29%. That’s the lowest we’ve seen since October, according to Mortgage News Daily via CNBC.

So, what’s driving the change—and what does it mean for buyers and sellers? Let’s break it down.

Why Rates Fell

The drop came right after the release of August’s jobs report, which showed weaker-than-expected growth in the labor market:

• Only 22,000 jobs were added in August (well below the 12-month average of 128,000).

• Unemployment ticked up to 4.3%.

• Wage growth slowed to 3.7%.

Health care and social assistance sectors saw gains, while federal government employment dipped.

These softer numbers are fueling expectations that the Federal Reserve will cut rates during its upcoming September 16–17 meeting—likely by at least 25 basis points.

Context for Buyers and Sellers

This isn’t the first time rates have shifted significantly this year. Since peaking at 7.08% back in May, mortgage rates have been gradually coming down. For buyers, this dip means slightly more purchasing power than we’ve seen in recent months.

Homebuilder confidence also got a boost from the news. Stocks for companies like Lennar, DR Horton, and Pulte climbed, and the homebuilding ETF (ITB) is up roughly 13% over the past month.

Will This Spark New Demand?

Here’s the big question: will lower rates lead to a noticeable jump in home sales? Nationwide, mortgage purchase applications are still down—about 6.6% lower than they were just four weeks ago. That shows buyer demand hasn’t bounced back just yet.

But real estate is always local. In certain metro areas where incomes are rising faster than the national average, buyers are regaining some ground. These markets may see a boost in activity even if the national picture remains slower.

What This Means for Knoxville Buyers & Sellers

For those of us here in East Tennessee, this rate drop could be a window of opportunity. While one rate cut won’t completely reset affordability challenges, it may be enough to tip the scales for buyers who have been waiting for the right moment to act.

If you’re considering buying, now is the time to get pre-approved so you’re ready to move quickly if rates continue to trend down. And if you’re selling, more buyers re-entering the market could mean stronger interest in your home.