Mortgage rate movement remains stuck in neutral as 2025 comes to an end, but the U.S. housing market has shown signs of life during a traditionally slow period.
On Monday, Mortgage News Daily reported an average 30-year fixed rate of 6.19%, down 5 basis points from a week earlier. And on Tuesday, HousingWire’s Mortgage Rates Center, which analyzes locked loans across all credit profiles, showed an average 30-year conventional loan rate of 6.36%, down 1 bps from a week ago.
The impact of stable mortgage rates was evident in November’s pending home sales data from the National Association of Realtors. At the national level, sales rose 3.3% on a monthly basis and 2.6% year over year.
But Lisa Sturtevant, chief economist for Bright MLS, cautioned last week that further declines in mortgage rates are unlikely in the near future. Other factors, such as cooling home prices and higher inventory levels, are more apt to push consumers into the market.
“There remains a lot of uncertainty in the economy,” Sturtevant said. “Mortgage rates likely will remain in this relatively narrow band in the early part of 2026. Overall, rates are expected to come down next year, but the trajectory will not necessarily be a smooth one.
“For prospective buyers who want to get into the market next year, it will be more important than ever to pay attention to local market conditions. Macroeconomic factors, like mortgage rates and inflation, only tell one small part of the housing market story. The level of local inventory at different price points, the pace of local market activity and how often homes sell below asking price in a local market are going to be key pieces of information buyers are going to want to have as they consider their home purchase in the months ahead.”
Jeff DerGurahian, chief investment officer and head economist at loanDepot, said he doesn’t expect “meaningful movement” for mortgage rates without “clearer signals” from upcoming employment and inflation reports.
“Markets are currently pricing in a near 90% chance of a 25-basis-point cut in one of the first three Fed meetings of 2026, with consensus calling for two cuts next year and a one-in-three chance of three,” DerGurahian said.
“Affordability could improve by midyear if inflation continues to cool, paving the way for 30-year fixed rates to move into the 5.5% range. Even with speculation around a recession, housing should remain a strong component of the economy thanks to record levels of home equity, which are the highest since the early 1960s.”
‘Clearer path’ for home sales
Sam Williamson, senior economist for First American, also said the pending home sales report offered some positive momentum for the housing market heading into 2026.
Sales rose across all four regions of the country. In the West, the median price for an existing home was down 0.9% annually, pushing sales up 2.4% to their highest level in more than a year.
“Taken together, the regional data suggest that buyers are finally finding the payment‑to‑paycheck equation more manageable in areas where prices are cooling the most,” Williamson said.
He also pointed to consistent increases in purchase mortgage application activity, which suggest that the “modest improvement in pending sales” may continue for a while longer.
“As we look to 2026, we believe sales activity next year will continue to be shaped more by ‘life happens’ moments — job changes, marriages, births, and other personal milestones — than by falling mortgage rates,” Williamson said.
“With affordability still stretched and inventory tight in many regions, the recent pullback in rates and cooling price growth have helped stabilize the landscape. These shifts offer a clearer path for buyers and sellers as 2026 approaches, setting the stage for a more constructive year ahead.”
Local-level price trends
According to First American’s Real House Price Index (RHPI) — which measures homebuying power by comparing home prices to household income and interest rate changes — affordability reached its highest level in more than three years in October.
Chief economist Mark Fleming said that while housing affordability remains 64% below its five-year average prior to the COVID-19 pandemic, it has improved for eight straight months.
“The one-two punch that did the most damage to affordability after the pandemic — rapid house price appreciation followed by a sharp run-up in mortgage rates — has lost its force. Price growth has cooled, mortgage rates have eased from their peak, and incomes have continued to climb higher.”
First American’s report showed that slower home-price appreciation is leading to higher levels of for-sale inventory in previous Sun Belt hot spots such as Austin, San Antonio, Miami, Tampa and Orlando. Conversely, major markets like Cincinnati, Chicago and Cleveland are seeing home prices heat up due to relatively low levels of supply.
At the state level, the company found that affordability was shrinking the most in Maine, New Hampshire, Connecticut, North Dakota and Alaska. But it’s improving at a faster clip in Florida, Nevada, Virginia, Texas and Washington, where RHPI readings dropped by at least 6.7% during the year ending in October.