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Housing affordability has improved to its strongest level in four years, driven by declining mortgage rates that have stayed below 6.25%. Nationally, the average 30-year fixed mortgage rate dipped to around 6.04% in January, according to recent reports, making homeownership more accessible for many prospective buyers.
These lower rates are empowering more buyers to seriously consider entering the market. At the same time, they are also opening significant refinance opportunities for those who purchased homes between 2023 and 2025 with rates above 6.85%. As a general rule, a drop of about 1% or more in rates is a strong signal to contact your mortgage professional and explore refinancing—potentially saving thousands over the life of the loan.
On the supply side, we talked extensively last year about the gradual increase in housing inventory, which gave buyers more options and kept price growth minimal (or even negative in some markets). However, the mortgage rate lock-in effect remains a powerful force. According to ICE Mortgage Technology's February 2026 Mortgage Monitor (as reported in HousingWire by Sarah Wolak), at the start of 2025, 39.4 million homeowners held mortgages below 5%, including 12.6 million below 3%. By the end of 2025, those figures had only modestly declined to 37.2 million (-6%) and 12.1 million (-5%), meaning roughly 95% of low-rate borrowers stayed put rather than sell and face higher rates.
What does this combination mean for the market? Buyer demand is poised to rise as affordability improves, while supply continues to inch up—but not enough to fully shift the balance toward buyers. As we approach the busy spring selling season, sellers may regain some leverage. For buyers, this underscores the need to be ultra-prepared: get pre-approved, have your finances in order, and move quickly on strong opportunities.
This dynamic points to a more balanced (but still competitive) market ahead. If you're thinking about buying or refinancing, now could be an ideal time to connect—feel free to reach out for personalized guidance!
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