Long-term mortgage rates have been declining since mid-2025 and ended the year at their lowest level since September 2024.

According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.19% in December — 5 basis points (bps) lower than November — and the 15-year rate declined 3 bps to 5.48%. Compared to a year ago, the 30-year rate and 15-year rate dropped 53 bps and 45 bps, respectively, or about half a percentage point.

Falling mortgage rates have started to translate into gains as existing home sales edged up slightly in November. However, this increase remains limited as mortgage rates above 6% are still considered elevated.

Nonetheless, as financing costs continue to decline, more households are likely to re-enter the housing market. An NAHB analysis shows that a 25-bps reduction in the 30-year mortgage rate from 6.25% to 6%, could bring approximately 1.1 million additional households back into the buyer pool.

NAHB expects the 30-year mortgage rate to average 6.17% in 2026 and reach 6% by 2027.

NAHB Economist Catherine Koh provides more details in this Eye On Housing post.