US mortgage rates declined for a second consecutive week but remained above the 7% threshold, failing to meaningfully revive the persistently sluggish housing market.
High homebuying costs are forcing prospective buyers to postpone their purchase plans while pushing a growing number of sellers to cut their listing prices.
The latest data show that US home sales prices have fallen for the first time in more than three years, further intensifying the supply-demand imbalance in the housing market.
According to data released by Freddie Mac on Thursday, the average rate on a 30-year fixed mortgage slipped to 7.24% from 7.32% a week earlier, its second straight weekly decline, though it remains close to its highest level since November 2023.
By comparison, the mortgage rate stood at just 6.17% a year earlier.
Notably, the 30-year mortgage rate has stayed above 7% for six consecutive weeks, the longest such streak since late 2023.
Although the rate has eased from the three-year high of 7.4% touched in mid-October, it is still more than a full percentage point above where it started the year, steadily worsening affordability for homebuyers.
High Rates Keep Suppressing Demand as Monthly Payments Climb
The US housing market is mired in a predicament where high home prices and high interest rates compound one another.
On one hand, persistently elevated mortgage rates make it difficult for many prospective buyers to afford a home; on the other, owners who already hold low-rate mortgages are reluctant to sell their existing homes to avoid taking on higher financing costs after trading up, further constraining the supply of available listings.
By one estimate, for a home valued at US$500,000 with a 20% down payment, the current monthly principal and interest payment is about US$333 higher than at the end of February, when US mortgage rates briefly dipped below 6%.
For a home valued at US$1 million with the same down payment ratio, the monthly mortgage payment is about US$666 higher than at the end of February.
Data from real estate brokerage Redfin show that the median monthly mortgage payment for US homebuyers is hovering near an all-time high.
Mike Fratantoni, chief economist at the Mortgage Bankers Association (MBA), said US mortgage rates are unlikely to decline significantly for some time.
"We do not expect to see any significant relief in mortgage rates over the forecast horizon," he said, noting that rates near three-year highs are causing a marked slowdown in home sales, mortgage originations and commercial real estate market activity.
Meanwhile, the Federal Reserve decided to hold rates steady at its October monetary policy meeting, and the market still expects it to raise rates further at its final meeting this year.
That means the US housing market is unlikely to receive meaningful rate relief in the near term.
US Home Prices Fall for the First Time in More Than Three Years as Sellers Outnumber Buyers
As housing affordability continues to deteriorate, increasingly clear signs of price cuts are emerging in the US real estate market.
Data released by Redfin on Thursday show the median US home sales price has declined for the first time in more than three years, reflecting how high homebuying costs are eroding sellers' pricing power.
At the same time, the supply-demand relationship in the housing market has shifted markedly.
Redfin data show that in September the number of sellers in the US housing market exceeded the number of buyers by nearly 63%, the widest gap since records began in 2013.
That figure indicates that while some existing homeowners remain reluctant to sell, the number of people willing to buy has fallen even faster, gradually giving buyers more leverage in price negotiations.
Asad Khan, a senior economist at Redfin, said the current US housing market presents a notable paradox: from a supply standpoint, buyers face one of the most favorable market environments in years, yet high homebuying costs leave many unable to take advantage of it.
"Ironically, from a supply standpoint, this may be one of the most buyer-friendly markets in years," Khan said. "But it's happening at a time when homebuying costs are so high that fewer and fewer people can afford a home."
New Home Sales Stay Weak as Builder Confidence Hits a 14-Year Low
High mortgage rates are not only hitting the existing-home market but also weighing on US new-home sales.
Data released by the US Census Bureau on Tuesday showed sales of new single-family homes fell 0.6% month over month in September, pointing to continued weak demand.
New-home prices are also facing downward pressure.
The data show that in seven of the nine months reported so far in 2026, the median US new-home sales price has declined.
Faced with weak sales, a growing number of homebuilders have had to attract buyers through price cuts and other incentives, further squeezing corporate profit margins.
According to the housing market index compiled jointly by the National Association of Home Builders (NAHB) and Wells Fargo, US homebuilder confidence has fallen to its lowest level in 14 years, pressured by high mortgage rates, persistent labor shortages and rising building material costs.
The difficulties facing builders also reflect that the weakness in the US housing market is not caused simply by a lack of supply, but by high financing costs that continue to suppress market activity from the demand side.
A Near-Term Housing Recovery Still Faces Challenges
Overall, although US mortgage rates have edged down for two consecutive weeks, financing costs above 7% still place clear pressure on the housing market.
For prospective buyers, high home prices combined with high rates keep monthly mortgage payments near historic highs; for sellers, a shrinking pool of buyers means homes may take longer to sell and downward price pressure is mounting.
In addition, slowing new-home sales, builder confidence at a 14-year low and sellers significantly outnumbering buyers in the existing-home market all indicate that the US housing market still lacks momentum for a sustained recovery.
With the Federal Reserve possibly raising rates further in the near term and mortgage rates unlikely to fall significantly, the US housing market may continue to face the twin pressures of weak demand and price adjustments.
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