Lower rates eased payments but demand remained stuck in holiday mode
Mortgage payments eased to their lowest point in two years, but the United States housing market entered 2026 with more hesitation than heat.
Real estate firm Redfin reported that the median monthly housing payment fell to $2,365 in the four weeks ending January 4, down 4.7% from a year earlier and the lowest level since early 2024.
The drop in payments tracked a broad retreat in borrowing costs. The weekly average 30-year fixed mortgage rate declined to about 6.15%, down from roughly 7% at the start of 2025 and close to recent readings from Freddie Mac and other trackers that placed rates in the low‑6% range.
Rates eased but buyers held back
Despite that relief, demand stayed soft. Pending home sales in Redfin’s data fell 6.7% year over year, while new listings dropped 8.3%, even as active inventory inched 2.3% higher.
“The housing market is in its holiday hangover season,” said Chen Zhao, head of economic research at Redfin.
“Prospective homebuyers are focused on getting back into work and school mode rather than hunting for houses–and in some parts of the country, snowy or wet weather is an obstacle. With mortgage rates and housing payments meaningfully lower than they were a year ago, we may see some buyers emerge in the coming weeks–and if buyers come, sellers are likely to follow.”
On the ground, some agents already reported more shoppers.
“House hunting has ticked up,” said Kansas City–based Redfin Premier agent Jo Chavez. “My clients want to buy something now, while homes are sitting on the market longer than usual and a fair amount of sellers are dropping their prices. They know that when the spring season starts, competition will pick up–especially if mortgage rates drop more.”
Economists saw ‘holiday hangover’ across mortgage data
Mortgage Bankers Association data pointed in the same direction. For the two‑week period ending January 2, total mortgage application volume fell 9.7% on a seasonally adjusted basis, even as MBA’s survey rate slipped to about the mid‑6% range.
“Mortgage rates started the New Year with a decline to 6.25%, the lowest level since September 2024. Refinance applications were up 7% for the week but were at a slower pace than in the weeks leading up to the holidays,” said Joel Kan, MBA vice president and deputy chief economist.
In prior commentary, MBA chief economist Mike Fratantoni said his team expects the trends of a softening job market, sticky inflation, elevated home inventories, and steady mortgage rates to persist into 2026, with only modest growth in terms of home sales.
For the two‑week period ending January 2, 2026, total mortgage application volume fell 9.7% on a seasonally adjusted basis from two weeks earlier, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey.https://t.co/m70PXM3ZeD
— Mortgage Professional America Magazine (@MPAMagazineUS) January 7, 2026
Broader outlook for affordability
Other forecasters also anticipated a slow grind rather than a surge. Freddie Mac’s chief economist, Sam Khater, called the late‑2025 decline in rates an “encouraging sign for potential homebuyers heading into the new year,” but warned that market momentum would still depend on the labor outlook and Fed policy.
As MBA recently reported, application volumes fell even when rates pulled back, highlighting how affordability, economic uncertainty and the so‑called lock‑in effect continued to restrain moves.
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