Mortgage Rates Drop Nearly a Full Point — Is Now the Time to Buy in the US?

Cold January, Lower Rates: What the 2026 US real estate market is telling us

The 2026 housing story begins with a contradiction: slumping sales amid cheaper borrowing. The real estate USA market opened the year with a weather-driven slowdown in transactions, yet mortgage financing became meaningfully more affordable. For buyers and investors the headline is simple: mortgage rates are almost a percentage point lower than a year ago, and that changes how far your dollar goes.

If you’re weighing a move, read this as a practical briefing. We walk through the facts, what they mean for budgets and negotiating power, and the exact steps you should take now if you want to buy in the spring surge.

Where the market stands after January 2026

January data from the National Association of Realtors (NAR) and weekly rate snapshots provided to NerdWallet by Zillow paint a mixed picture.

• Existing-home sales fell by 8.4% in January, a sharp monthly drop that the NAR partly attributes to an extreme cold snap that impacted activity.
• Inventory sits at 3.7 months’ supply, up from 3.5 months in December and slightly higher than a year earlier. That level signals a moderate seller’s market but with loosening pressure on buyers.
• The national median price of existing homes rose to $396,800, up 0.9% year-over-year.
• Competition is cooling: homes received an average of 2.2 offers in January compared with 2.6 offers a year ago.
• Only 16% of sales closed above list price in January, roughly flat with recent months.
• The median days on market increased to 46 days, from 39 days the prior month and 41 days a year earlier.

Those data points are not uniform across the country. Prices and momentum vary by region, which matters if you’re searching in a specific state or metro area.

Regional price dynamics you need to know

The national median conceals meaningful regional swings. According to the NAR:

• Northeast: $505,400, up 5.8% year-over-year.
• Midwest: $295,400, up 2.3%.
• South: $351,200, up 0.1%.
• West: $600,400, down 1.4%.

For investors this split matters. The West is the only region with year-over-year price declines, which could be a signal of market recalibration after earlier price runs. The Northeast shows the strongest nominal gains, but higher entry prices mean different cash needs and cap-rate expectations.

Mortgage rates: the practical effect on your monthly payment

Mortgage financing softened in mid-February. Zillow data shared with NerdWallet shows weekly average rates for the week ending Feb. 12:

• 30-year fixed: 5.99% APR
• 15-year fixed: 5.35% APR
• 5/1 adjustable-rate mortgage (ARM): 6.34% APR

What do these rates buy you? Using the example in the original dataset, a buyer putting 20% down on a $350,000 home would see principal and interest payments change materially as rates move:

• 5.0% → $1,503 per month
• 5.5% → $1,590 per month
• 6.0% → $1,679 per month
• 6.5% → $1,770 per month

The move from 6.5% to 5.99% reduces monthly principal and interest by roughly $91 in that example. Small percentage-point shifts have outsized effects on purchasing power.

Practical takeaway: locking a rate matters. A modest rate drop expands your price range or reduces monthly carrying costs.

Supply and bargaining power: is it a buyer’s market yet?

Technically the market is still tilted toward sellers, but the tilt is softening. Analysts use months of supply to define balance: about six months equals a neutral market. At 3.7 months, sellers still have an edge, but the gap is closing. You can see the effect in these trends:

• Fewer bidding wars mean buyers can more often write offers without the intense premium seen in 2021–2022.
• Sellers who list in the winter months tend to be motivated; that can translate to concessions on price or terms.
• Increasing days on market gives buyers more time to inspect, arrange financing and negotiate contingencies.

That does not mean bargains are everywhere. Well-priced homes in attractive neighborhoods still move quickly, often drawing multiple offers. The key is local market microdynamics: inventory and demand differ between metros, suburbs and secondary towns.

What signals buyers and investors should watch in February–April

Spring is the active window. Based on historical patterns and current data, expect these developments:

• More listings arrive in February and March, increasing selection but also raising competition by April.
• Mortgage rate volatility will track macroeconomic developments, including Federal Reserve decisions; the Fed left the federal funds rate unchanged on Jan. 28 and held a policy meeting in mid-March.
• Inventory increases may give buyers more negotiating leverage, but seasonal demand can still push prices up for well-presented homes.

Keep an eye on these indicators weekly:

• Local months-of-supply and active listing counts
• Median sale price and price per square foot trends in your target neighborhood
• Average days on market for comparable properties
• Share of sales above list price and percentage price reductions

These metrics give you a read on whether you can push on price, bid cleanly, or should prepare for a multiple-offer scenario.

How to prepare now: specific steps for buyers and investors

Here is a practical checklist we recommend based on the current facts.

• Get mortgage preapproval for a 45–60 day rate lock. That duration helps you lock the current average 30-year rate near 5.99% and take your search through March or April without re-qualifying.
• Clean up credit: lenders reward higher scores. Borrowers with scores around 740 and up get the best mortgage pricing.
• Manage your debt-to-income ratio (DTI). Aim for a DTI at or below 36% to qualify for stronger terms.
• Shop mortgage quotes from at least three lenders.