Market Spotlight #194 | What Lower Rates Could Mean for 2026 Buyers

The 2026 housing market is starting with a subtle but important shift: mortgage rates are lower than they were a year ago, and buyers are noticing. The average 30‑year fixed rate has slipped to roughly 6.1%, down more than a full percentage point from recent peaks. While weekly purchase applications fell from the prior week, year‑over‑year demand is up nearly 25%, signaling that buyers are re‑engaging with measured confidence rather than fear of missing out.

Supply tells a similar story of quiet leverage. New listings spiked week‑over‑week as the calendar turned, but overall inventory is only modestly higher than last year. Price reductions remain elevated yet are trending lower, which means buyers still have negotiating room—but the easy inventory gains we saw in 2024 are starting to fade. If rates move even slightly lower, more buyers could jump back in at once, pushing prices higher and tightening the window for negotiation.

Policy headlines and administration comments may add noise, but the bond market is still focused on fundamentals like jobs and inflation. For real estate agents and loan officers, the message to buyers is clear: this is not a market where you wait for “perfect” rates. It’s a market where you use today’s lower mortgage rates and still‑favorable inventory to your advantage before the next wave of demand arrives. The smart move is to run scenarios now, understand what lower rates mean for monthly payment and price point, and be prepared to act before 2026 momentum fully kicks in.