Mortgage rates are finally under 6%. But don’t start panic-browsing open houses just yet — the housing market would like you to take a minute.
The average 30-year fixed rate just fell to 5.98%, according to Freddie Mac — the first time it’s dipped below that line since September 2022. In 2023, rates peaked at 7.76%. A few years before that — before the Federal Reserve started hammering inflation with aggressive rate hikes — buyers were locking in mortgages around 2.9%. That number now sounds like a fever dream.
This latest drop marks a national average, which means some markets are still higher and others have already dipped into the 5s.
For a housing market that’s been dragging, that psychological shift matters. Sales of existing homes in 2024 fell to their lowest level since 1995, and early data suggests 2025 isn’t staging a dramatic rebound.
Freddie Mac’s chief economist, Sam Khater, said the lower rate, combined with gradually improving inventory, could pull more buyers back in as the spring season ramps up.
“This rate, combined with the improving availability of homes for sale, is meaningful and will drive more potential buyers into the market for spring homebuying season,” said Khater, Freddie’s chief economist, in a release.
The bond market is helping with the 10-year Treasury yield — which mortgage rates tend to shadow — slipping to 4%. Meanwhile, a January report from Zillow found U.S. home values have declined for six straight months, and the typical monthly mortgage payment is 8.4% lower than a year ago. The typical home value now sits at $358,968, up just 0.2% year over year.
The Market Isn’t Exactly Humming
If you’re expecting buyers to storm open houses, that’s not what’s happening.
Existing-home sales are down month over month and year over year in every region, according to the National Association of Realtors. Chief economist Lawrence Yun said affordability has improved thanks to easing rates and wage growth outpacing home price gains, but supply “remains quite low.”
Only 28 out of every 1,000 U.S. homes changed hands in the first nine months of 2025, according to an analysis from Redfin. That’s a turnover rate of 2.8% — the lowest in at least three decades.
To put that in perspective, during the 2021 buying frenzy, roughly 44 homes per 1,000 sold over the same stretch. Even in 2019, before the pandemic distortions, turnover was closer to 40 per 1,000. This year’s pace is nearly 38% lower than the pandemic peak.
“No one’s buying cause prices still are pandemic level. House I was interested in went up by 113% in 4 years. Nope, not gonna happen,” said one user on Reddit.
The median home price hit a record $400,300 in January and refinance activity is picking up — applications are up 150% from a year ago, according to the Mortgage Bankers Association. Anyone who bought at 6.99% or north of 7% is watching this like a hawk.
“I’m waiting for it to get below 6% to refinance. We bought March 2023 at 6.99% and this headline got me excited for nothing,” wrote another Redditor.
But purchase applications fell 5% week over week. Lower rates are doing more for refinancers than they are for buyers, who still aren’t convinced this is the moment.
How do you feel about this latest mortgage rate drop? Let us know in the comments.
