With mortgage borrowing costs sliding to multiyear lows last week, millions of mortgaged U.S. households suddenly found themselves eligible to lock in lower monthly payments through refinancing.
For only the second time in more than three years, average rates for 30-year fixed-rate home loans slid below 6%, which housing economists see as a key psychological threshold for homeowners and sidelined borrowers alike.
“For homeowners with a rate north of 6%, this is a moment to run the numbers,” said Chen Zhao, head of economics research at Redfin, in a research brief published Monday. Rocket Companies, owner of Rocket Mortgage, acquired the listings platform last March.
“It’s not the once-in-a-generation opportunity we saw in 2020, but it could provide meaningful savings,” Zhao added, underscoring opportunities for borrowers and lenders as enduring mortgage rate lock-in effects still obstruct sales and inventory growth.
More than 1 in 5 outstanding first-lien mortgages carry a rate above 6%, according to Redfin, demonstrating normalization across the broader housing market and the softening of pesky lock-in effects. But lenders’ pipelines have largely been filled with refinances to kick off 2026, amid a winter of reliably sluggish homebuying activity so far.
The pace of existing-home sales plunged to multiyear lows in January as purchase rate-lock volumes — a forward-looking measure of sales momentum — were 5% lower year over year. Purchase locks were also down more than 20% compared to the previous three months’ of trended rate-lock data, according to Optimal Blue.
Meanwhile, purchase contract cancellations soared in January as buyer caution persisted amid uncertain economic conditions. Nevertheless, housing economists regard the approaching sales season with optimism, should months of steadily improving market conditions continue trending in homebuyers’ favor.
Alongside easing borrowing costs, inventory expanded notably in 2025, leading to softening price gains or outright price declines in many major metros last year. Last week the Federal Housing Finance Agency reported nine states saw year-over-year price declines in December, up from just one over the previous 12 months.
“Whether price growth stays contained this spring will depend in large part on how supply evolves relative to demand,” said Sam Williamson, senior economist at title insurance giant First American Financial Corp., in commentary shared with Scotsman Guide.
“If supply remains tight and housebuying power stays ahead of list prices, the spring homebuying season may break out of a three-year slump, even if just modestly,” he added. The annual pace of existing-home sales ended 2025 near three-decade lows, according to the National Association of Realtors, just above 4 million units for the third straight year.
What also remains to be seen are whether efforts advanced by the Trump administration to improve homebuying affordability will ultimately impact the marketplace this spring.
For example, a proposed ban on single-family home sales to large investors remains under consideration as policymakers set about defining what constitutes a large investor. Any proposed ban, once outlined, would likely require congressional authorization and could face legal challenges delaying its implementation.
Meanwhile, an early January announcement that Fannie Mae and Freddie Mac would subsidize mortgage rates by purchasing $200 billion in mortgage-backed securities caused an immediate one-eighth of a percentage point drop in mortgage rates and spike in refinance volumes.
However, that rate relief has proven short-lived amid unclear execution and rising uncertainty related to tariffs and geopolitical tensions. The Supreme Court recently rejected the legal rationale underpinning sweeping global tariffs first imposed by President Donald Trump last April.
“Long-term tariff revenue projections are a mixed bag that must make many assumptions,” said Selma Hepp, chief economist at real estate market analytics firm Cotality, in remarks shared with Scotsman Guide. “Nonetheless, with tariffs firmly in place, American households will continue to feel the pinch of high prices on most of their day-to-day purchases.”
Amid this environment of heightened uncertainty, the Federal Reserve will meet on March 17 and 18 to update its quarterly summary of economic projections and consider whether an adjustment to the federal funds rate, currently in a target range of 3.5% to 3.75%, is necessary.
With inflation stuck above the Fed’s stated 2% target for annual growth and job creation remaining shaky in many sectors, traders in federal funds rate futures have put the odds of Fed officials leaving rates steady in March at more than 97% as of Monday afternoon, according to a tool from CME Group, a derivates marketplace.
