• The housing market is loosening up as supply climbs and home prices drop, Redfin said.

• The 30-year fixed mortgage saw its biggest weekly drop in over a year as US bond yields fell.

• "I'm advising buyers to lock in a mortgage rate as soon as they drop to a number where they can make the math work."

The housing market is loosening up as mortgage rates have tumbled, but it doesn't necessarily guarantee lasting relief for buyers, Redfin said.

As a result, this may be the time to lock in a deal, the real-estate data firm said, noting that while mortgage rates could keep falling, they may easily rebound to prior highs.

"I'm advising buyers to lock in a mortgage rate as soon as they drop to a number where they can make the math work," Redfin agent Hal Bennett said in the note. "Payments could go up hundreds of dollars overnight if the winds shift on mortgage rates, and all of a sudden you won't be able to afford the home you want or you won't qualify for a mortgage. This window of opportunity could be narrow."

In the last week, the 30-year fixed mortgage rate notched its biggest weekly drop in over a year, sliding from 7.86% to 7.61%.

That's as US bond yields have plunged on recent dovishness from the Federal Reserve and economic data that suggest inflationary pressures are easing.

Though mortgage rates are still near 23-year highs, these adjustments are enough to trim a few hundred dollars of a monthly payment, Redfin said.

Meanwhile, homebuyers are already jumping off the sidelines to take advantage of current mortgage levels, with application volumes jumping 3% week over week.

And 7% of sellers dropped their asking prices, a record amount. Added to that, homes for sale have remained unseasonably elevated. New listings rose 1.5% from a year ago during the four weeks ending November 5, just the second increase since July 2022, according to Redfin.

But a reversal in economic good news could snap the trend, the note warned, such as if the upcoming consumer price index showed higher-than-expected inflation.

And central bank officials have been careful to remind markets that interest rate hikes are still on the table. Recently, Fed Governor Lisa Cook noted that geopolitical tensions could prompt a resurgence in inflation.

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