(NerdWallet) – Mortgage rates fell to their lowest levels since March because job growth has been surprisingly weak this summer.

The average rate for a 30-year fixed mortgage fell to 6.7% in the week ending August 7, down from 6.87% the week prior. This is the lowest it has been since the week ending March 13, when it averaged 6.62%.

A lousy jobs report

Mortgage rates started to decline last Friday morning, right after the release of the July employment data. The Bureau of Labor Statistics reported an increase of 73,000 jobs, which was below economists’ predictions. Moreover, previous job growth estimates for May and June were downgraded by a combined 258,000 jobs.

Investors were caught off guard and as let down as a child expecting a Barbie for her birthday but ending up with a pack of pencils instead.

Kara Ng, a senior economist at Zillow, explained in an email that “Friday’s underwhelming jobs report caused a noticeable drop in mortgage rates, as investors are now assuming slower economic growth and anticipate an earlier start to Fed rate cuts.”

Help from the Fed is dead ahead

According to the CME FedWatch tool, it is now anticipated that the Federal Reserve will likely cut short-term interest rates at its upcoming meeting ending on September 17. Prior to the jobs report on Friday, there was less than a 50% chance believed by investors for a rate cut.

The Federal Reserve has the responsibility to both combat unemployment and manage inflation. Typically, it lowers short-term rates when job availability is low and increases rates when there is rapid inflation. Before the jobs report, the Fed’s focus seemed more on inflation than unemployment. However, with the recent job figures, investors now see unemployment as a bigger concern, expecting the central bank to respond with at least one interest rate cut.

The mortgage market is acting like the Fed will be ready to take action next month, explained Odeta Kushi, deputy chief economist for First American, a provider of title insurance and real estate settlement services.

“Since mortgage rates tend to move ahead of Fed actions, they’ve been falling in anticipation,” Kushi said in an email. “If confidence builds around a September rate cut, we could see rates continue to trend downward in the near term.”

How much will this help, really?

But what if mortgage rates stop falling? Then this week’s rate decrease is a nothingburger, Ng believes. “This dip likely won’t be enough to salvage the sluggish home buying season,” she said. “Lower rates may tempt a few prospective home buyers off of the fence, but a dip of this size isn’t likely to make a notable difference.”

However, interest rates could drop significantly if the economy falls into a recession — that’s what Mike Chadwick, president of Fiscal Wisdom Wealth Management, believes will happen. “I think we’re also going to see a situation where mortgage prices come down and property values come down, which is not something you see every day,” he says.

Lower mortgage rates and lower home prices might sound like a wonderful combination for people who aspire to buy their first home. But it would take a deep recession for those two events to come together, meaning a lot of folks would be unemployed or scared of losing their jobs. That’s not a recipe for a lively housing market.