Buyers may be getting the upper hand over sellers in protracted standoff
Mortgage applications stayed largely flat across the US last week as average rates hovered above the six-percent mark, keeping a lid on potential homebuyer activity for now.
The Mortgage Bankers Association (MBA) said application volume was down by 0.3% overall for the week ended February 6 as the seasonally adjusted Purchase Index slipped by 2% to cancel out a slight weekly uptick in refinance applications.
That indicates a mortgage and housing market that’s still struggling to shake off the sluggishness of 2025, with MBA vice president and deputy chief economist Joel Kan highlighting continuing affordability challenges and hope for lower rates as key factors keeping buyers and refinancers on the sidelines.
Pending sales reportedly saw encouraging growth in January, according to Realtor.com, although that was likely due in part to an all-too-brief drop in mortgage rates into the fives after President Trump ordered Fannie Mae and Freddie Mac to buy $200 billion worth of mortgage bonds.
Is the national buyer-seller standoff nearing an end?
The good news for mortgage industry members: a big trend that kept the market frozen last year could be shifting.
Home sellers and buyers were locked in something of a standoff for much of the year, with buyers awaiting lower rates and prices while many sellers refused to budge on their own expectations.
Late last year, tens of thousands of sellers yanked their homes off the market because of the gap between their price target and what buyers were actually willing to pay.
That’s a sharp contrast from the height of the COVID-19 bull market, when buyers competed frantically to purchase properties and final sales prices often surged past the original listed valuation.
But buyers now firmly have the upper hand – and that’s reportedly leading some real estate professionals to have frank conversations with clients selling a home.
“One of the things that I’m hearing a lot more anecdotally about is just that realtors are getting more aggressive about… advising their clients to get more real on pricing,” Marty Green (pictured top), principal at mortgage law firm Polunsky Beitel Green, told Mortgage Professional America.
“One of the things that we are starting to see… is that if sellers are really wanting to move inventory, even if we have a more favorable rate environment, they’re probably going to also have to do some at least modest price adjustments to get their houses [sold].”
More markets now tilting in buyers’ favor
A record number of home-purchase agreements were canceled across the US at the end of 2025, suggesting affordability challenges and other reasons for hesitancy are continuing to gnaw at buyers.
And even more regional markets are now swinging in their favor, Realtor.com said – with 18 metros now featuring more than six months of supply, giving many Americans more choice than ever as they weigh up a purchase.
That means unless rates see a significant drop, plenty of properties are likely to sit unsold for quite some time this year as borrowers search for deals.
Opinions are divided on whether mortgage rates have further to fall this year, although few are expecting a deep dive into the low fives – meaning sellers might have no choice but to trim prices further if they want to find takers for their homes.
“I think cancellation rates are one of the reasons motivating the realtors to get people where they’re happy with the pricing on the buyer’s side,” Green said. “And a reduced price, along with some other incentives, certainly gets them there.
“If we get some lower interest rates, that could moderate that price reduction a little bit more. If you don’t see interest rates come down, I would anticipate that we’re going to continue to see some pricing pressure and to see prices moderate downward.”
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