Happy New Year! I hope your 2026 is off to a wonderful start. Now that we’ve all settled back into our routines, I’ve been diving into the latest market data to see what’s in store for the housing market.
There is a lot of “noise” out there right now, but if I had to summarize the mood in one phrase, it would be cautious optimism. We are seeing a “gradual thaw” in the market—nothing moves overnight, but the ice is definitely starting to melt.
The Numbers: Where We Stand
This week, the 30-year fixed-rate mortgage remained steady and is still showing a significant improvement from this time last year, when rates were nearly 7 percent.
Interestingly, while rates are hovering just above that 6 percent psychological barrier, buyers aren’t waiting on the sidelines anymore. Purchase applications are actually up over 20 percent compared to a year ago. It seems many of you have decided that waiting for the “perfect” moment is less important than finding the “perfect” home.
Why Things Are Feeling “Lighter”
Several factors are working together right now to make homeownership feel more attainable:
• Improving Affordability: According to First American, affordability is at its best level in three years. Incomes are starting to grow faster than home prices, which helps that monthly payment math finally “work” for more families.
• More Options: Inventory is higher than it was last year. This is a huge win for buyers because it reduces that “bidding war” fatigue and gives you more breathing room to make a thoughtful decision.
• Inflation is Cooling: Our most recent inflation data (the CPI report released today) shows that price pressures are remaining in check. In the world of mortgages, lower inflation is the “fuel” we need for lower rates.
The “Tug-of-War” in Washington
Behind the scenes, there is a fascinating debate happening at the Federal Reserve. While the official stance is cautious, some officials, like Governor Stephen Miran, are pushing for more aggressive rate cuts. He believes that as housing and rent costs continue to drop, the Fed should be much bolder.
Right now, the market is in a bit of a tug-of-war. Some investors are betting rates will stay where they are, while others are bracing for a move lower. This is why we see rates “chopping” around in a tight range lately.
What This Means for You
Whether you are looking to buy your first home, move up to something bigger, or you’re a partner helping clients navigate these waters, the message is clear: The market is moving again. The “Golden Handcuffs” (trapping homeowners that have ultra-low rates from years ago) are starting to loosen. For the first time in years, the number of people with rates above 6 percent is catching up to those with rates below 3 percent. This means more people are willing to sell, move, and keep the market fluid.
I’m watching the upcoming retail and housing reports closely this week. In the meantime, I’m always here if you want to run the numbers on a specific property or just chat about how these trends affect your personal financial goals.
P.S. Curious how much your specific “buying power” has changed with the recent interest rate shifts lower? Would you like me to run a quick, updated affordability snapshot for your target price range? Just let me know, or you can text/call me at 818.307.6072.
