Thirty-year mortgage rates rose this week to 6.342%, up from 6.326% the week before, according to U.S. News data. Modest changes in borrowing rates may be par for the course during the first quarter of 2026.
In December, the Federal Reserve cut its benchmark interest rate for the third time last year. A lowering of the federal funds rate, however, is not expected to drive mortgage rates downward significantly.
If inflation continues to cool in 2026 and the economy begins to slow, that could support a gradual decline in mortgage rates. But even within the context of a gradual decline, weekly upticks in borrowing rates can’t be ruled out.
Housing Market Conditions Could Improve, Even if Mortgage Rates Don’t
Homebuyers may be getting increasingly antsy as they wait for mortgage rates to follow a steadier downward trajectory. Many will no doubt be in for a rude awakening if rates continue to flip-flop during the first quarter of the year and beyond.
Still, the news isn’t all bad for prospective homebuyers. A January CNBC survey found that real estate agents expect a shift toward a more balanced market in the coming months. And despite elevated home prices in many markets and limited inventory, 42% of agents feel it’s currently a buyer’s market.
In late December, Redfin reported that there were 37.2% more home sellers than buyers in the U.S. housing market the previous month. But housing inventory doesn’t tell the whole story, as many would-be buyers have stepped back from the market, given the high cost of borrowing coupled with elevated home prices.
“A modest improvement in housing affordability could bring some homebuyers off the sidelines in 2026,” said Asad Khan, Redfin senior economist, in the report.
[Calculate: Use Our Free Mortgage Calculator to Estimate Your Monthly Payments.]
Buyers Should Remain Optimistic
The National Association of Realtors said last week that it expects home sales to increase by about 14% nationwide in 2026.
“We are seeing a little better condition for more home sales … with more inventory and the lock-in effect steadily disappearing — because life-changing events are making more people list their property to move on to their next home,” said Lawrence Yun, the group’s chief economist, in the report.
Movement on mortgage rates may play a small role in that activity, though, with home prices being the larger deciding factor.
November’s median existing-home sale price was $409,200, per NAR, marking 29 consecutive months of annual gains. If home prices start to wiggle downward, the shift could improve affordability more than a gradual dip in mortgage rates, especially given the ever-present option to refinance once economic conditions spur a more notable decline in borrowing rates.
More from U.S. News
Lower Mortgage Rates Are a Gift for Holiday Homebuyers
Mortgage Rates Drop to Start Off 2026
Mortgage Rates Stable After Fed Rate Cut
Mortgage Rates Creep Upward in Early January originally appeared on usnews.com