Mortgage Rate Outlook: Improved Momentum and Opportunity

The housing market entered 2026 with renewed optimism. In February, mortgage rates dipped below the 6% threshold for the first time in over three years, triggering an 11% jump in mortgage applications. Inventory is also beginning to build as we approach the Spring selling season, signaling a healthier and more active market.

More recently, geopolitical tensions have introduced some uncertainty, pushing mortgage rates back up into the low-6%’s. While that has tempered some of the early momentum, it hasn’t changed the broader trajectory. Today’s rate environment remains meaningfully improved from the highs of the past two years, and demand continues to respond when conditions improve.

Looking ahead over the next six months, mortgage rates are expected to remain relatively “sticky” in the low 6%’s. Inflation risks—driven in part by energy prices moving back above $100 per barrel—may limit how quickly rates decline, and the Federal Reserve has taken a cautious, data-driven stance. Where we thought we might see the Fed lower the Fed Funds Rate two more times this year, now that’s looking unlikely (unless we see a recession). That said, even a stable rate environment provides a more predictable backdrop for both buying and selling.

Inventory trends are also evolving. While some homeowners with 3%–4% mortgages are pausing their plans due to rate volatility, overall inventory is still up roughly 10% year-over-year. Even modest increases in supply can improve buyer choice, reduce competitive pressure, and create more balanced conditions.

Home price growth is expected to remain modest, likely in the 1%–2% range nationally. However, the market continues to vary by region. Parts of the Sun Belt and West—where new construction has been more active—are seeing some price softening, while supply-constrained markets in the Northeast and Midwest continue to show resilience and firm pricing.

There are, of course, uncertainties that could influence the path forward—from global events to Federal Reserve policy, leadership changes, and broader economic shift. But housing has consistently shown an ability to adapt. Strong homeowner equity, steady underlying demand, and long-term supply constraints continue to provide meaningful support.

In summary, this is not a stalled market – it’s a gradually transitioning one. While short-term volatility may persist, the foundation remains solid. With the right strategy, both buyers and homeowners can move forward with confidence and take advantage of opportunities as they arise.