Mortgage rates steady as monthly payments hit 2-year low
The year is off to a good start with steady mortgage rates, more inventory and flat price growth. What remains to be seen is whether buyer demand will return.
Key points:
- The 30-year fixed-rate mortgage averaged 6.16% as of Jan. 8 — the lowest rate for the first week of a new year since 2022.
- Seasonality and low consumer confidence are weakening demand, with mortgage applications sluggish at the start of 2026.
- But inventory is up year-over-year, signaling that home shoppers in many markets will have more options heading into the spring buying season.
One week into 2026, the housing market is in a better position to attract homebuyers than it was a year ago — but that may not matter if the lack of consumer confidence in the wider U.S. economy continues.
Mortgage rates hold steady
Mortgage rates remain around the lowest levels of the past few years. Freddie Mac estimates that the 30-year fixed-rate mortgage averaged 6.16% this week, up a tick from the end of 2025 but well below the 6.93% average rate recorded this time last year.
This week brought the lowest 30-year rate reading for the first week of a new year since the ultra-low level of 3.22% in 2022, before inflation began roaring back. While nowhere near those 2022 levels, the steady downward trend in mortgage rates seen over the past few months could make home shoppers more optimistic, said Danielle Hale, chief economist at Realtor.com.
"Lower mortgage rates are particularly beneficial for first-time homebuyers who have navigated the challenge of still-elevated rents and high-home prices while trying to compete with investors for the limited number of entry-level options," Hale said.
Mortgage applications — and consumer sentiment — fall
Even with lower and more stable rates, the mortgage industry is seeing softer demand at the start of the year, according to Samir Dedhia, CEO of One Real Mortgage.
"Some of that is seasonal, but there's also a clear 'wait and see' attitude from both buyers and homeowners. Rates may have come down, but not far enough to fundamentally change the affordability equation, especially with home prices still elevated," Dedhia said.
Mortgage application data backs up Dedhia's assessment. For the week ending Jan. 2, overall mortgage applications were down 9.7% compared to two weeks prior, according to the Mortgage Bankers Association — and that's after making adjustments for the holidays.
The sluggish activity comes as consumer sentiment remains low. The Consumer Confidence Index, which measures U.S. consumers' feelings on their own finances and the economy at large, was at 89.1 in December, the lowest level since April 2025 when the president's tariff announcements created widespread uncertainty.
Monthly payments drop
If consumers can regain confidence, they will find that the median monthly mortgage payment is in better shape. Redfin estimates that the median payment dropped to $2,365 during the four weeks ending Jan. 4, down 4.7% from one year earlier. While that amount is still significantly higher than before the home-buying frenzy brought on by 3% mortgage rates, it is at the lowest level since the start of 2024.
Redfin's report also noted that early-year demand is weak — but Chen Zhao, Redfin's head of economic research, expects that to change in the coming weeks.
"The housing market is in its holiday hangover season," Zhao said in a news release accompanying the Redfin data. "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."
Active listings up year-over-year
Home shoppers will also find more choices compared to a year ago. Active listings rose 12.1% in December 2025 compared to a year before, according to Realtor.com data, but dropped from November to December as part of the market's seasonal slowdown, pushing active listings below 1 million for the first time since April of last year.
Home prices are also fairly flat compared to a year ago. Realtor.com's report pegged the median listing price at $399,950 in December, down 0.6% compared to the end of 2024, while Redfin estimated that the median sale price was $382,370 for the four weeks ending Jan. 4, up 1.1% year-over-year.