Mortgage rates remain elevated on Thursday with the 30-year fixed average at 6.375% according to the latest update from Zillow Home Loans. The 15-year fixed rate is sitting at 5.5%, while adjustable-rate mortgages like the 7-year ARM are hovering around 6.75%. Despite historically high borrowing costs, a new housing report reveals home prices are beginning to soften in key metro areas—particularly across the South and West—creating new opportunities for buyers.
Zillow: August 7 mortgage rate update by loan type
Zillow Home Loans’ most recent figures show the following interest rates, updated August 6:
30-Year Fixed:
Rate: 6.375%
APR: 6.560%
Points: 1.910 ($5,252.50)
15-Year Fixed:
Rate: 5.500%
APR: 5.794%
Points: 1.882 ($5,175.50)
20-Year Fixed:
Rate: 6.125%
APR: 6.357%
Points: 1.836 ($5,049.00)
30-Year FHA:
Rate: 6.000%
APR: 6.683%
Points: 1.658 ($4,559.50)
30-Year VA:
Rate: 6.125%
APR: 6.424%
Points: 1.867 ($5,134.25)
7-Year ARM:
Rate: 6.75% (variable)
Rates are influenced by credit scores, down payment size, and loan type. Borrowers should also factor in points and origination fees, which directly impact the APR.
Southern and Western metros see sharpest price declines
While rates remain a hurdle, inventory increases and buyer fatigue are starting to shift the balance in select housing markets. According to a Realtor.com report highlighted by CBS News, home prices have dropped significantly in 19 of the 50 largest U.S. metro areas—all located in the South and West.
Miami saw the steepest drop, with median listing prices falling approximately 19% since July 2022. Austin followed with a 15% decline. Other notable markets include Los Angeles, where prices have dipped in the past year but still remain over 18% above 2022 levels.
Economists attribute this price correction to rising inventory. New construction, lingering listings, and a more cautious buyer pool are all contributing factors. In markets like Austin and Denver, pandemic-era demand led to rapid building, and those units are now hitting the market amid tempered interest.
Metro areas with largest home price declines since 2022:
Miami, FL: -19%
Austin, TX: -15%
Dallas, TX: -8.5%
Houston, TX: -5.1%
Los Angeles, CA: Price dipped recently but remains +18% vs. 2022
The South and West also benefit from looser zoning laws and more permissive construction policies, which allowed builders to keep up with demand in recent years. That surge in supply is now leading to more competition and, in turn, falling prices.
Prices climb in the Northeast and Midwest as supply remains tight
While buyers in some cities are starting to see relief, others are still dealing with high prices and limited supply. In the Northeast and Midwest, restrictive zoning and fewer new listings have kept inventory down and prices high.
According to Realtor.com senior economist Jake Krimmel, active listings in the Northeast are down 50% compared to pre-pandemic levels. In the Midwest, inventory is down by 40%.
New York’s median listing price has risen nearly 16% since July 2022. In Milwaukee, prices are up 26%, and Philadelphia has seen an 11.6% increase.
Metro areas with price gains since 2022:
Milwaukee, WI: +26%
New York-Newark-Jersey City: +15.8%
Philadelphia-Camden-Wilmington: +11.6%
Chicago-Naperville-Elgin: +7.7%
These gains are partially due to zoning restrictions that make large-scale homebuilding difficult. With few new units coming online and strong demand from buyers in dense urban centers, prices have remained resilient—even as mortgage costs remain high.
Why mortgage rates remain high in 2025
Interest rates have remained above 6% for most of 2025 due to ongoing inflation concerns and Federal Reserve policy. Although inflation has cooled from its 2022 peak, it remains above the Fed’s long-term target, and policymakers have kept the federal funds rate elevated in response.
Mortgage rates tend to track the yield on 10-year Treasury notes, which are also up in 2025. As long as inflation expectations remain elevated, and the Fed signals cautious policy, mortgage rates are unlikely to fall substantially in the short term.
How to qualify for better mortgage rates
Despite national averages, many borrowers can secure better-than-average rates with the right financial profile. Zillow recommends the following to increase your chances:
- Higher credit score: Aim for 740+ to access premium rates
- Bigger down payment: 20% or more helps reduce lender risk
- Lower debt-to-income ratio: Keep debt below 36% of monthly income
- Rate shopping: Compare FHA, VA, and conventional options
- Consider buying points: One point typically lowers your rate by 0.25%
Zillow’s BuyAbility tool also offers personalized mortgage rate estimates based on location, income, and credit data.
Should you lock in a mortgage rate now?
With 30-year fixed rates showing little movement in recent weeks, locking in may make sense—especially if you’re buying in a market where home prices are trending downward. In cities like Austin, Miami, or even Denver, buyers can offset high rates with a more favorable purchase price. For others in the Northeast or Midwest, tight supply may keep both prices and competition high heading into the fall.