UNITED STATES— Elevated mortgage rates, which have kept many prospective home buyers on the sidelines, are expected to ease slightly in 2026. However, forecasts indicate the relief will be marginal, preventing a significant return to market affordability.
Housing forecasters predict the 30-year fixed-rate mortgage will average around 6% next year. This represents a modest decline from this year’s estimated 6.6% average, but it is still far from the ultra-low, sub-3% rates seen during the peak of the pandemic in 2021.
The consensus among major housing and economic groups suggests a slow, modest decline, reflecting a stabilization in the broader economy rather than a sharp correction.
| Forecaster | Predicted Average 30-Year Fixed Rate for 2026 |
| National Association of Realtors | 6.0% |
| Fannie Mae | 6.0% |
| Redfin | 6.3% |
| Realtor.com | 6.3% |
| Zillow | Expects rates to “hold above 6%” |
If these forecasts prove accurate, 2026 will extend the recent downward drift in borrowing costs. According to Freddie Mac, the 30-year fixed-rate averaged 6.22% as of Thursday, a notable drop from the 6.60% recorded at the same time one year ago.
Understanding the Slow Decline: The Fed and Economic Factors
The slow pace of the forecasted rate decrease is tied directly to the Federal Reserve’s cautious approach to monetary policy and the structural issues facing the housing market.
Federal Reserve Policy
Despite the Fed’s third consecutive interest rate cut on Wednesday, markets largely anticipated the move, meaning it had already been priced into mortgage rates.
- Limited Future Cuts: According to projections released by policymakers, the Fed expects only one more rate cut in 2026. This signal that borrowing costs will likely remain near current levels—rather than fall substantially—is a key factor anchoring mortgage rates.
- The Inflation Factor: The Fed’s primary goal remains controlling inflation. As Redfin’s head of economics research, Chen Zhao, noted, “Given the underlying economic fundamentals of 3% inflation coupled with a weakening — but not recessionary — labor market, the Fed is likely to hold steady in the near future.” A sharp drop in mortgage rates would likely signal that inflation or the job market is heading in the wrong direction, which economists currently do not expect.
Housing Market Structure
Fed Chair Jerome Powell underscored that the central bank’s recent move wouldn’t “make much of a difference” for housing, citing persistent market challenges:
- Low Supply: Housing inventory remains low.
- The ‘Lock-In’ Effect: “Many people have very, very low mortgages from the pandemic period,” Powell said. These homeowners are reluctant to sell, further constraining supply and preventing a significant drop in home prices or mortgage rates.
While a rate of 6% is higher than many buyers would prefer, it is historically within a normal, sustainable range, especially compared to the all-time high of 18.63% in 1981, or the average of 7.70% the 30-year fixed rate has held since 1971.
Realtor.com expects this slow, modest decline to improve affordability, albeit slightly, moving the market toward a “healthier” balance. Redfin suggests rates may dip below 6% “occasionally” but “not for any meaningful period.”
