Mortgage rates dropped slightly this week amid new signals that the labor market is weakening and the Federal Reserve will cut interest rates again next month.
The average 30-year mortgage rate was 6.23% through Tuesday, according to Freddie Mac data, down from 6.26% a week earlier. The average 15-year mortgage rate was 5.51%, from 5.54%.
The 10-year Treasury yield, which mortgage rates closely track, has been falling as odds of a benchmark rate cut in December are on the rise. In recent days, New York Fed president John Williams, San Francisco Federal Reserve president Mary Daly, and Federal Reserve Governor Christopher Waller have all signaled in interviews or speeches that they would support cutting next month.
Learn more: How the 10-year Treasury affects mortgage rates
Consensus about a December rate cut is growing as new data suggests the labor market continues to weaken. This month, job losses at private employers sped up, according to data released on Tuesday by payroll processor ADP.
Traders now see an 83% chance of a 25-basis point cut at the Fed’s Dec. 9-10 meeting, according to CME FedWatch. Although mortgage rates aren’t directly controlled by the Fed, they do move based on expectations about future Fed interest rate policy.
Another cut “could bring mortgage rates near 2025-lows just as the year comes to a close,” Jake Krimmel, Realtor.com senior economist, said in a statement.
“This would give homebuyers something to be thankful for heading into 2026, while potentially buoying a housing market which has seen some light tailwinds of late,” he added.
Treasury yields and mortgage rates also moved lower on Tuesday after Bloomberg News reported that White House National Economic Council Director Kevin Hassett, a close ally of President Trump and a supporter of lower rates, is seen as the likely frontrunner to succeed Jerome Powell as Fed Chair.
Mortgage rates have been hovering around year-to-date lows of 6.2% to 6.3% for most of this fall, bringing some buyers back into the market. Contract signings jumped 1.9% in October from a month earlier, new National Association of Realtors data showed. Applications to purchase a home were up 8% through Friday compared to a week earlier, according to the Mortgage Bankers Association.
Read more: 8 strategies for getting the lowest mortgage rate right now
Claire Boston is a Senior Reporter for Yahoo Finance covering housing, mortgages, and home insurance.
Sign up for the Mind Your Money newsletter
Read the latest financial and business news from Yahoo Finance