US Housing Market: Mortgage Rates Fall to a Three-Year Low
The 30-year fixed rate declines to 6.01%
Lower borrowing costs in the US are beginning to shift the balance in the housing market. A prolonged period of expensive credit restrained buyer activity and kept prices elevated, but conditions are now gradually adjusting. Home price growth has slowed, and buyers have gained greater room for negotiation, Bloomberg reports.
US Mortgage Rates: Lowest Since 2022
The average rate on 30-year fixed mortgages in the US fell to 6.01% from 6.09% a week earlier, according to the Federal Home Loan Mortgage Corporation (Freddie Mac). A year ago, the rate stood at 6.85%. The current level marks the lowest reading since September 2022.
In January 2026, the Federal Reserve kept its benchmark rate in the 3.50–3.75% range. The meeting minutes indicate that future decisions will depend on inflation trends and broader macroeconomic data. Financial markets are pricing in one or two potential rate cuts this year, a shift already reflected in Treasury yields and creating conditions for a gradual decline in mortgage rates.
Lower rates are improving conditions for borrowers after several years of tight credit. An extended period of elevated funding costs dampened buyer activity and constrained transaction volumes across the housing market.
US Home Prices: Growth Slows
Price dynamics also point to a shift in the cycle. The median US home price rose just 1.1% year-over-year in January. Over the past ten months, annual growth has remained below 2%, according to calculations by brokerage firm Redfin.
The contrast with the post-pandemic period is stark. At that time, home values were rising at double-digit rates, sharply reducing affordability for a broad range of buyers.
Redfin Senior Economist Asad Khan said rapid price increases in previous years pushed many buyers out of the market. As a result, price growth has cooled. Supply now significantly exceeds the number of active buyers, strengthening buyers’ negotiating power and keeping further price gains in check.
US Home Sales
Demand remains subdued. Pending sales of existing homes fell to a record low in January, reflecting continued caution among buyers. The inventory of such properties stood at about 1.22 million units, equivalent to 3.7 months of supply at the current sales pace. The figure increased compared with last year but remains below the level typically considered fully balanced.
A combination of moderate income growth and gradually easing borrowing costs creates conditions for a potential recovery. An additional signal comes from residential construction: housing starts climbed to a five-month high, showing broad-based gains across segments.
Outlook for the US Housing Market
Analysts at International Investment note that lower mortgage rates and slower price growth are contributing to a more balanced market structure. Buyers have greater leverage in negotiations, developers have an incentive to revive projects, and sellers face pressure to adopt more flexible pricing strategies. Rising inventory and a growing share of price concessions are gradually reshaping transaction patterns.
Structural challenges persist. Demand remains at historically low levels, some households continue to face limited access to financing, and the accumulated supply deficit of previous years has not been fully resolved. The market’s sensitivity to Federal Reserve policy and Treasury yield movements adds further uncertainty.
The housing market is moving through an adjustment phase after a period of overheating. With stable employment and moderate inflation, a gradual transition to a more sustainable model is possible, yet a rapid return to previous transaction volumes does not appear imminent.