Mortgage rates have eased in recent weeks, and industry forecasts suggest the 30-year fixed-rate mortgage could fall to around 6% in the coming year, a meaningful shift from the nearly 7% levels seen at the start of 2025. Such a decline could bring millions of sidelined buyers back into the housing market.
According to research by the National Association of Realtors (NAR), a one-percentage-point drop in mortgage rates could expand the pool of potential homebuyers by about 5.5 million households, including 1.6 million renters who may newly qualify for ownership.
Economists say lower borrowing costs would be particularly beneficial for first-time buyers, many of whom have struggled with affordability amid high home prices and rising rents. Rate relief could also encourage existing homeowners—many locked into ultra-low mortgages from earlier years—to list their homes and move, helping to ease inventory constraints.
NAR expects mortgage rates could stabilize near 6% by 2026, citing factors such as recent Federal Reserve rate cuts, inflation trends, fiscal pressures, tariff impacts, quantitative tightening, and movements in the 10-year Treasury yield.
Affordability pressure begins to ease
The U.S. housing market is gradually emerging from one of its most challenging affordability periods in years. While elevated home prices remain a hurdle, mortgage rates have been a key barrier. Between mid-2022 and late-2023, rates surged from around 3% to above 7%, pushing typical monthly mortgage payments more than $1,000 higher than pre-pandemic levels.
Even a modest rate decline can make a significant difference. For example, on a $500,000 home with a 30-year loan and 10% down payment, a mortgage at 7% would result in a monthly payment of about $3,895. At 6.25%, payments fall to roughly $3,672, saving borrowers more than $220 per month.
Early signs of market response
Some regional markets are already showing signs of renewed momentum. In Florida, home sales rose about 10% year over year this fall as mortgage rates declined, with pending single-family home sales jumping 23% in October, when average rates hovered near 6.25%.
Similar patterns have emerged in Virginia, where economists report an uptick in sales activity coinciding with rate improvements, suggesting pent-up demand may be starting to release.
Markets that could benefit most
NAR analysis indicates that if mortgage rates fall to 6%, several metro areas could see a sharp increase in households qualifying to buy. Among the biggest potential beneficiaries are:
- Kalamazoo–Portage, Michigan: +8%
- Yuma, Arizona: +7.5%
- Racine, Wisconsin: +7.5%
- Hilton Head Island–Bluffton, South Carolina: +7.4%
- Rochester, Minnesota: +7.4%
- Olympia–Lacey–Tumwater, Washington: +7.2%
- Wilmington, North Carolina: +7.2%
Industry experts say while a 6% mortgage rate is still well above pandemic-era lows, it could mark a turning point—broadening affordability, restoring buyer confidence, and setting the stage for a more balanced housing market in the years ahead.
