Mortgage rates are hovering near their lowest levels since March, after finally coming down from above 7% over the summer. In fact, mortgage interest rates have been bouncing in a relatively narrow range over the past few weeks, giving those looking to buy a home or refinance their mortgage a sense of stability not seen in many months.
“There is growing evidence that homebuyers are digesting these lower rates and gradually are willing to move forward with buying a home, which is boosting purchase activity,” says Sam Khater, Freddie Mac’s chief economist, in an Oct. 9 release.
[Read: Best Mortgage Lenders]
The recent drop in rates, combined with favorable homebuying conditions that present annually in mid-October, should be good news for the mortgage industry. However, the government shutdown is looming over an otherwise positive week for housing.
‘Best Time to Buy’ Is Here — If Congress Cooperates
The best time of the year to buy a home in 2025 is Oct. 12-16, according to a new report from Realtor.com. The real estate listings website found that during this time frame, homebuying demand is 30.6% lower than it is during the peak season, leading to roughly $15,000 in savings for homebuyers.
“Historically, mid-October offers the best mix of pricing, inventory and reduced competition for buyers,” says Realtor.com senior economist Anthony Smith in an Oct. 9 statement. This seasonal shift is influenced on a greater scale by school schedules, since many families with kids choose to move during summer break. Climate patterns also play a part, since warmer weather, longer daylight hours and greener lawns during the summer months make house showings more appealing than during fall and winter.
But 2025 brings a wildcard into even the most well-thought-out homebuying plans. This year, the shutdown of the federal government could offset some of the benefits of buying during the slower October housing market.
[See: 2025 Mortgage Rate Forecast: When Will Rates Go Down?]
What a Government Shutdown Means for Housing
Let’s start on a positive note: The government shutdown, which is now in its second week, could potentially lead to lower mortgage rates. Long-term fixed mortgage rates tend to follow the yield on 10-year Treasury bonds. Bond yields usually fall during times of economic uncertainty as investors flee to the safety of the bond market — including during government shutdowns.
That downward trend is beginning to appear in the data, which shows that mortgage rates fell slightly this week. But mortgage rates aren’t the only thing that homebuyers need to consider when buying a home amid a shutdown. The government shutdown could lead to potential snags in the mortgage process for some homebuyers.
“Federal workers and contractors in affected metropolitan areas may see housing plans postponed, and mortgage processing may be slowed for loans requiring federal verification or flood insurance tied to the National Flood Insurance Program,” Smith says.
The National Association of Realtors estimates that the lapse in the federal flood insurance program alone could put about 1,400 real estate transactions a day at risk. While the affected closings are temporarily allowed to proceed without flood insurance, it puts homeowners at risk of being uninsured against “the most common and costly natural disaster in the U.S,” per NAR.
While there’s been no progress on a plan to fund the government at the time of writing, “this fall could bring a rare combination of opportunity and breathing room for motivated home shoppers” if the shutdown is resolved in a timely manner, Smith says.
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Mortgage Rates Decline Ahead of ‘Best Time’ of the Year to Buy a Home originally appeared on usnews.com
