Is a more affordable housing market on the horizon?

Core Insights - Mortgage rates have significantly decreased from recent highs, providing relief for buyers and refinancing opportunities for homeowners affected by the "golden handcuff effect" [1] - Despite improvements, experts caution that achieving true affordability in the housing market will require time [1] Market Dynamics - The housing market has seen limited movement since interest rates surged post-COVID-19 pandemic, with homeowners reluctant to sell due to low mortgage rates and potential buyers facing high borrowing costs and limited inventory [2] - Early signs of improvement in housing affordability are emerging, with indications of price drops, although official data has yet to confirm this trend [3] - Inventory levels in the real estate market are showing growth, contributing to a more balanced market and providing buyers with more options than in recent years [4][6] Mortgage Rate Trends - The average rate on a 30-year fixed mortgage fell to 6.35%, marking the largest weekly drop in the past year [7] - Mortgage rates have declined nearly 70 basis points from the 2025 high and about 150 basis points from the 2023 peak, improving near-term affordability [6][8] Future Projections - Interest rates are expected to remain in the low 6% range for at least the next year, with modest improvements in affordability anticipated [10] - Income growth is predicted to help alleviate financial burdens, although the pace may slow as the labor market cools [11] - While there is potential for modest improvement in housing affordability, a complete "unlock" is not expected in 2026/2027 [13]