A significant retreat in U.S. mortgage rates has provided a glimmer of opportunity for prospective homebuyers, with the average 30-year fixed loan falling to 6.17% this week, its lowest point in over a year.

This decline arrives just one day after the Federal Reserve enacted its second interest rate cut of the year, a move aimed at stabilizing an economy facing a prolonged government shutdown and a wave of corporate layoffs. The current rate environment offers a stark contrast to the same period last year, presenting a more favorable borrowing landscape for those entering the housing market.

This shift in financing costs is unfolding against a complex housing backdrop. According to the latest data from Realtor.com, the national real estate market is sending mixed signals. While the total number of homes for sale has increased for 24 consecutive months, the rapid growth in inventory is showing clear signs of deceleration, suggesting the post-pandemic recovery in housing supply may be reaching a plateau. Furthermore, a notable regional divide that has characterized the market is beginning to narrow, with inventory growth cooling in the previously hot markets of the South and West.

Despite the lure of lower monthly payments, buyer activity remains surprisingly subdued. Homes are sitting on the market for longer, with the median time on market now at 63 days, reflecting a continued sense of caution among consumers.

This hesitancy is also reflected in a year-over-year dip in pending sales, indicating that attractive rates alone are not enough to fully energize the market. Price trends further illustrate a fragmented landscape, as the national median listing price held relatively steady while the price per square foot actually declined, with decreases concentrated in the South and West.

Adding a new layer of uncertainty, the ongoing federal government shutdown is beginning to leave a mark on housing sentiment, particularly in metropolitan areas with high concentrations of government workers.

Early metrics show a dip in both new listings and online search activity in regions like Washington, D.C., and Baltimore, pointing to shaken confidence. For buyers who have been waiting on the sidelines, however, the combination of the lowest mortgage rates in a year, stabilizing prices, and a growing selection of homes could create a critical window of opportunity before the end of the year.