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High Mortgage Rates Continue to Stifle Homebuyer Affordability

  //house-home.news-articles.net/content/2026/01/1 .. -continue-to-stifle-homebuyer-affordability.html
  Published in House and Home on Tuesday, January 13th 2026 at 16:36 GMT by CBS News

The Rate Riddle: Affordability and Buyer Hesitation

The most significant hurdle facing potential homebuyers remains the stubbornly high mortgage rates. After briefly dipping in late 2025, rates have plateaued around 7%, a far cry from the historically low rates enjoyed during the pandemic era. This has dramatically impacted affordability, particularly for first-time buyers who are now facing substantially higher monthly payments. Zillow senior economist Jeff Tucker highlighted the reality: "If you're a first-time buyer, you're really struggling. We're not seeing a huge drop in rates, so the monthly payment is just really high."

While predictions of rate declines persist, the timeline remains frustratingly vague. The Federal Reserve's actions hold the key, with any shifts in monetary policy directly influencing mortgage rate trajectories. Redfin chief economist Daryl Fairweather's sentiment reflects the prevailing uncertainty: "We're anticipating rates to fall, but we don't know when." This lack of clarity keeps many potential buyers on the sidelines, contributing to a slowdown in sales activity.

Inventory: The Core Constraint

The chronic shortage of homes for sale remains a persistent problem. New construction efforts are underway, attempting to alleviate the pressure on the market. However, these efforts haven't yet managed to significantly boost overall inventory to meet existing demand. "We need more supply," Tucker emphasized, "New construction is helping, but it's not enough to offset the number of homes that are still missing from the market." This scarcity is a critical factor underpinning current home prices.

Price Stability with a Cautious Outlook

Despite the affordability challenges, the limited inventory has provided a buffer, preventing a dramatic collapse in home prices. Prices have certainly cooled down from the peaks of the pandemic-era frenzy, but they remain considerably above pre-pandemic levels. While significant price appreciation seems unlikely in the near term, further declines are also not anticipated. The market appears to be settling into a period of relative price stability, albeit at a higher baseline than many remember.

The Political Landscape: A Potential Catalyst

The upcoming presidential election is poised to add another layer of complexity to the equation. Both presidential candidates, incumbent President Biden and former President Trump, have identified housing affordability as a key issue and have proposed policy solutions. The specific approaches differ, naturally, with potential impacts ranging from tax incentives for first-time buyers to adjustments in lending regulations. "Housing policy is definitely going to be a focus of the election," Gardner noted, "The outcome could have a significant impact on the market." The potential for policy changes introduces another element of uncertainty for both buyers and sellers.

Looking Ahead: A Summary of Expectations

Experts generally agree that the US housing market will remain in a state of transition for the foreseeable future. Here's a concise summary of what to expect in the coming months:

• Mortgage Rates: Expect continued volatility with rates likely to remain elevated in the short term. Any significant declines are contingent on Federal Reserve actions and macroeconomic conditions.
• Home Prices: Prices are expected to remain relatively stable, with limited potential for significant appreciation or depreciation.
• Inventory: The inventory shortage is likely to persist, continuing to support prices and limiting buyer options.
• Policy: The outcome of the presidential election could introduce new housing policies, potentially influencing market dynamics.