Mortgage Rates Drop Sharply After BLS Jobs Report

Mortgage rates dropped sharply after the Bureau of Labor Statistics’ August employment report, released on Sept. 5, raised fears of a rapidly weakening labor market, according to analysis from Zillow. Job growth slowed significantly, prior months’ gains were revised downward, and the unemployment rate held relatively stable because people left the workforce. In anticipation that the Federal Reserve will cut interest rates aggressively in the coming months to support the economy, investors have driven mortgage rates lower.

Impact on the housing market

Even with modest rate relief, affordability remains a major hurdle for homebuyers. More sellers have come off the sidelines, especially in the first half of this year, but the buyer pool has not kept pace, leading to a high number of listings and price cuts.

For buyers who can navigate today’s affordability constraints, the market has become more favorable. There’s less competition, more inventory, and greater negotiating power. Zillow’s market heat index shows more and more major metro areas are shifting into neutral or buyer’s market territory; a clear break from the seller-dominated markets of recent years.