Mortgage rates just slipped to their lowest level in a year, a welcome break after surpassing 7% at the start of 2025. Freddie Mac’s latest survey shows the 30-year fixed rate mortgage averaged 6.19% on October 23, 2025, down from 6.54% a year ago. Yet even with that relief, home sales are only inching higher, not surging. September existing home sales rose a modest 1.5% month-over-month to a 4.06 million annual pace but still subdued by historical standards.
So, what’s holding buyers back?
Affordability is still stretched
A low-6% mortgage is a relief compared with last year’s highs, but prices haven’t rolled over. NAR reports the median existing home price was $415,200 in September, up 2.1% year over year. That keeps monthly payments elevated even with slightly cheaper financing. At roughly 6.2% on a $425,000 home with 20% down, the monthly all-in still lands near $2,430, a level many households can’t comfortably absorb.
Sentiment is cautious, and buyers are waiting for a bigger drop
Total existing homes available for sale have increased over the year from 1.36 million in September 2024 to 1.55 million in September 2025 (NAR), and homes are sitting longer with days on market increasing from 42 to 50 during the same time (Redfin data). The selection of homes available to potential buyers is better than a year ago, just not enough of the right homes at the right prices to spark a sales boom.
Inventory is improving, but not where buyers need it most
Total existing homes available for sale have increased over the year from 1.36 million in September 2024 to 1.55 million in September 2025 (NAR), and homes are sitting longer with days on market increasing from 42 to 50 during the same time (Redfin data). The selection of homes available to potential buyers is better than a year ago, just not enough of the right homes at the right prices to spark a sales boom.
Labor market and macro uncertainty keep wallets closed
Even small changes in job security or inflation expectations can derail a purchase decision. Recent data shows a stalled labor market and combined with widespread financial anxiety stemming from the government shutdown, tariff concerns, and renewed recession fears, many Americans are choosing to hold off on making the biggest purchase of their lives
Sales are improving but not dramatically
To be fair, lower rates are helping at the margin; September’s existing home sales reached a seven-month high. That’s progress. But the level of sales is still far below the 5+ million range that felt normal pre-pandemic, and industry analysts caution that it may take either a larger rate decline or more meaningful price relief to restore robust transaction volumes.
The takeaway
Mortgage rates falling to a one-year low is necessary but not sufficient for a sales surge. Veros does not expect rates to go below 6% next year. With prices still high, sentiment still cautious, and inventory still mis-matched, the path from cheaper financing to closed sales is longer than one might think. For a real inflection, buyers will likely need either meaningfully lower rates than today or more affordable listings in the neighborhoods they want.
