This past January, mortgage rates hit a 22-year high. A 30-year fixed mortgage climbed to 7.16%—a rate so high you’d have to go back to 2001 to find something similar!! Yes, affordability took a hit. Economist James Knightley broke it down this way:
"At a 7.16% mortgage rate, the monthly payment on a $417,200 loan is roughly $2,820. Back in the ultra-low-rate environment of 2021, that same monthly payment could have supported a home closer to $670,000."
That’s a staggering shift in buying power. But even during the peak of rates, there was an interesting argument emerging about why demand never fully disappeared. Axios reporter Felix Salmon wrote:
“At this point, mortgage rates are so high they’re almost a reason to buy, on the grounds that they have to come down at some point—and when mortgage rates come down, prices go up.”
Since January, the market has had to navigate continued inflation pressures, rising household costs, and global instability that slowed many economists’ optimistic housing forecasts for 2026. The result: buyers hit pause, sellers hesitated, and the market drifted sideways. But now? We’re starting to see movement again.
Mortgage rates have gradually eased downward and are now sitting around 6.23% for a 30-year fixed loan according to Freddie Mac—down from 6.46% just two weeks ago and lower than the 6.62% we saw this time last year. At the same time, home prices are only up 1.6% year-over-year nationally. That’s a remarkably modest increase compared to the frenzy buyers experienced just a few years ago.
And that may be the real story here. Not a market crash. Not a return to 3% mortgage rates. But something we haven’t seen in a while: stability.
Buyers today may not have the ultra-cheap financing of 2021, but they do have something many buyers back then didn’t: stagnant prices. The irony of this housing market is that many buyers spent two years waiting for affordability to return through dramatically lower interest rates…while the real opportunity may have been the return of balance itself.
No, this isn’t 2003 affordability. But the American Dream? Still flying steady.
