Buyers Gain Ground: Mortgage Rates Slip Below 6% as US Home Prices Fall Again

Regional differences and sector winners

National averages conceal regional variation. Our reading of the report and broader market indicators suggests several patterns buyers and investors should consider:

• Sunbelt and formerly red-hot markets may soften more slowly because long-term demographic and job growth support demand. However, where investors overbuilt or remote-work driven moves reverse, price adjustments will be deeper.
• High-cost coastal markets may show headline declines in price-per-square-foot but still remain expensive in absolute terms; affordability gains there are incremental.
• Suburban and exurban markets that saw rapid price gains during the pandemic are now offering more choice and slightly longer listing times, which can translate into negotiation room for buyers.

Investors should look for markets where rental demand remains intact even if sales cool; owner-occupiers should focus on neighborhood-level fundamentals such as schools, commute times and local employment trends rather than national headlines alone.

Practical strategies for buyers and investors this spring

We favor a measured approach. Lower rates and more inventory create opportunity but also require discipline.

Buyers should consider:

• Getting mortgage pre-approval at today's rates to lock purchasing power and demonstrate seriousness to sellers.
• Targeting homes with longer days on market or price reductions as those listings are likeliest to yield deals.
• Inspecting comps and price-per-square-foot trends at the neighborhood level rather than relying on metro or national averages.

Investors should consider:

• Stress-testing cashflow scenarios with conservative rent and vacancy assumptions; falling acquisition prices help returns but rising financing costs can offset gains.
• Watching new-home completions data; with a 7.9% drop in completions in 2025, supply pressure from builders is limited, which can support rents in constrained markets.
• Preparing for a tighter underwriting environment for investment loans even if consumer mortgages ease.

Sellers should not ignore these signals. Pricing to current market conditions and offering flexibility on closing timelines or minor repairs will be important to avoid extended listing periods.

Risks and watchpoints

The current shift in favor of buyers is real, but not guaranteed to lead to broad price collapses. Here are the main risks:

• Mortgage rates could rise again if inflation picks up or if global shocks change risk premiums, erasing some of the demand gain from lower rates.
• Inventory recovery is slowing compared with last year's rebound; if listings stall, prices could stabilize rather than continue to fall.
• Local markets can diverge sharply from national trends; areas tied to single industries or with concentrated new supply can see outsized moves.

Weighing these, our view is cautious: the data indicates a correction in price growth and easing financing costs, making conditions better for buyers in many markets, but buyers should avoid assuming a rapid further decline.

Bottom line for buyers, investors and expats

The market is shifting. Lower rates, rising active inventory and continued weeks of negative price growth make conditions more favorable for buyers and offer selective opportunities for investors. Yet the recovery in supply has slowed compared with last year and construction is down, which means balance will come slowly.

For those ready to act this spring, practical steps include securing financing now, focusing on neighborhood-level metrics, and being prepared to negotiate on price and contingencies. For investors, falling list prices may improve acquisition math, but underwriting should remain conservative given potential rate volatility.

I think the most useful way to sum this up is: the market is loosening for buyers without collapsing for sellers. That creates room to negotiate, but it does not guarantee a bargain on every property.

Frequently Asked Questions

Q: Are mortgage rates likely to stay below 6%?

A: Nobody can predict rates with certainty. The 5.98% average for the week ending Feb. 26 is the lowest since September 2022, and compares with a 6.76% average for the same period in 2025. Rates may move up or down with economic data, inflation readings and Fed policy expectations, so buyers who can lock a favorable rate should consider doing so.

Q: Does a 2.4% fall in median list price mean homes are cheap?

A: A 2.4% year-over-year decline signals easing, not a collapse. Because the price-per-square-foot also fell 2.4%, the decline reflects real price adjustments rather than changes in the mix of homes listed. Buyers gain negotiating power, but “cheap” depends on local market context and absolute price levels.

Q: With new-home completions down 7.9%, will there be a housing shortage?

A: The drop in completions means builders are not currently offsetting resale supply gaps. That could support rents and prices in markets with steady demand, but it does not automatically create a shortage everywhere. Regional job growth and migration patterns will determine local supply-demand balances.

Q: How should I approach buying this spring?

A: Get pre-approved, track neighborhood-level days on market and recent sales, and be ready to act if a well-priced property appears. Expect to negotiate, especially on homes that have been listed longer or show recent price reductions.

(Analysis based on the Realtor.com Weekly Housing Trends Report and Freddie Mac mortgage data cited in the latest industry release.)