Mortgage Rates Drop to 6.6% as a ‘Balanced’ Market Comes Into View for 2025

Mortgage rates fell from 6.69% last week to 6.6% for a 30-year fixed home loan for the week ending Dec. 12, according to Freddie Mac.

“The 30-year fixed-rate mortgage decreased for the third consecutive week,” said Sam Khater, Freddie Mac’s chief economist, in a statement.

Yet, with the end of the year closing in, many buyers and sellers may be more focused on what will happen in the 2025 market.

“Although elevated mortgage rates continue to weigh on listing activity, we anticipate that housing inventory will gradually improve as declining rates and the passage of time help mitigate the lock-in effect on existing homeowners,” says Realtor.com® economist Jiayi Xu in her recent analysis.

Here’s a further breakdown of the latest housing market data and what it means for homebuyers and sellers.

The mortgage rate outlook

Where mortgage rates are headed in 2025 can’t be pinned entirely down, given the unpredictability of economic headwinds.

Yet, according to the Realtor.com 2025 housing forecast, mortgage rates are expected to average 6.3% across 2025 and end the year at 6.2%.

But getting closer to 6% might be a bumpy road.

“The Freddie Mac rate for a 30-year mortgage likely held steady this week as the 10-year Treasury yield stayed around the 4.2% mark since last week’s release,” says Realtor.com senior economist Ralph McLaughlin.

Translation: Mortgage rates often follow the ups and downs of the 10-year Treasury yield. Since that yield has been stable, mortgage rates likely stayed steady, too.

However, the market expects the Federal Reserve to lower interest rates in December, influenced by a recent consumer price index inflation report that matched expectations, meaning lower rates may soon be on the way.

Home prices tick down

Buyers looking to close a deal before the new year have some good news: The median listing price fell by 1.2% year over year for the week ending Dec. 7. (Median home prices hit $416,880 in November.)

This marks the 28th week in a row where the national median home listing price was down or remained flat, a record that began on June 1.

However, last week’s price comes with one very large grain of salt. Home prices are down, yet so are the size of homes.

“When a change in the mix of inventory toward smaller homes is accounted for, the median listing price per square foot increased by 1.5% this week compared with the same time last year,” says Xu.

Housing stock is on the rise

Buyers had more homes to choose from for the week ending Dec. 7, with 23.5% more homes for sale than a year ago.

While the number of homes for sale has consistently increased for 57 straight weeks, growth for the week ending Dec. 7 was the slowest since March.

“As the mortgage rates remain close to 7%, the combination of sluggish listing activity and muted buyer demand has led to a slowdown in inventory growth,” explains Xu.

The sluggish pace can be seen in the new listing for the week ending Dec. 7—a barely-there 2.6%.

“The pace of growth suggests a more cautious environment where sellers are holding back, and buyers are taking their time—creating a more balanced but tentative housing landscape,” says Xu.

Homes are lingering on the market

Home shoppers looking to put a home under the Christmas tree this season are taking their time making an offer.

The average home spent eight days more on the market for the week ending Dec. 7 compared with the same time last year. (The average home spent 62 days on the market last month—marking the slowest November in five years.)

“For 24 consecutive weeks, homes have spent at least five days longer on the market than they did last year,” explains Xu. “With plenty of inventory to choose from and few financially attractive prospects, buyers are taking their time.”