2026 Home Buying Outlook: Mortgage Rates Hold Near 6%, Affordability Improves Slightly

Mortgage rates in the U.S. are expected to remain between 6% and 6.5% in 2026, according to the Mortgage Bankers Association and Redfin, offering only modest relief for homebuyers despite Federal Reserve rate cuts. The 10-year Treasury yield, which influences long-term borrowing costs, has not declined significantly, limiting downward pressure on mortgage rates. Home sales remain near historic lows, but new construction is outpacing existing-home sales due to builder incentives such as rate buy-downs and reduced closing costs. In August, new homes sold for an average of $413,500—below the $422,600 average for existing homes—driving demand in markets like Cleveland, Detroit, Memphis, and Oklahoma City, where affordability remains relatively stronger. Adjustable-rate mortgages (ARMs) are gaining popularity, with 10% of borrowers opting for them in September—up from a historical 6%. These loans offer lower initial rates but carry risk of payment increases after the introductory period. Borrowers with strong credit scores are more likely to qualify, according to MBA Deputy Chief Economist Joel Kan. Despite persistent high prices, 2026 may present a slightly better window for buyers, particularly in mid-tier markets with stable affordability and competitive new-home pricing.