The average 30-year fixed mortgage rate has fallen below 6% for the first time since 2022, according to Freddie Mac's weekly survey. The drop has triggered a surge in homebuying activity as millions of Americans who had been waiting on the sidelines finally see a window to enter the market.
Mortgage applications jumped 34% in the week rates crossed below 6%, the largest single-week increase in three years. Realtors in major markets including Phoenix, Tampa, Atlanta, and Dallas report that open houses that previously drew a handful of visitors are now attracting dozens of prospective buyers in a single afternoon.
The affordability math is starting to work for more Americans. At 7.5%, the monthly payment on a $400,000 home (with 20% down) was $2,237. At 5.8%, that same mortgage costs $1,879 β a $358/month saving, or $4,300 per year. For many households on the edge of affordability, that is the difference between qualifying for a loan and not.
Inventory remains the market's biggest constraint. The US has a shortage of approximately 3.8 million housing units, according to Freddie Mac. New construction is accelerating β housing starts hit their highest level since 2006 last quarter β but supply will take years to catch up with demand.
"This is not a buyer's market yet," cautioned Lawrence Yun, chief economist at the National Association of Realtors. "But it is becoming a fairer market, and that is a step in the right direction."
