After a long stretch of sluggish activity, housing is showing real signs of life. Falling borrowing costs have nudged would-be buyers back into the hunt, and builders are seeing the first meaningful pickup in momentum since the early pandemic boom.
Affordability is the spark. The average 30-year fixed rate has eased to roughly 6.26% in the last week, according to Freddie Mac, about 150 basis points below the mid-2023 peak. Prices have also taken some of the edge off, with the national median sale price slipping to about $410,800 in the second quarter—roughly 7% beneath the late-2022 high. Together, cheaper financing and modestly lower prices are widening purchasing power for households that sat out the frenzy.
Industry economists say this isn't a one-off blip. Edward Seiler of the Mortgage Bankers Association notes that affordability has improved for four consecutive months as rates drift lower and incomes rise, a combination that expands what buyers can reasonably qualify for and comfortably carry. That steadier backdrop helps explain why more shoppers are stepping off the sidelines.
Nowhere is the shift clearer than in the new-construction market. Sales of newly built homes accelerated sharply in August, jumping about 20.5% from July and 15.4% from a year earlier, to a seasonally adjusted pace near 800,000. That is the fastest clip since January 2022, when borrowing costs first began to climb. Resales have been slower to respond, but even there the latest readings show a 2% month-over-month uptick, and a fresh Fannie Mae analysis projects existing-home transactions could advance close to 10% in 2026 as rate relief and mobility gradually improve.
Mortgage demand is echoing the trend. Applications rose 9.2% in the week ending September 5, the strongest weekly burst since 2022, then vaulted another 29.7% the following week before growth cooled to 0.6% in the period ending September 19. Refinancing activity has also perked up as owners with higher-rate loans take advantage of the recent slide, with refi share climbing alongside average loan sizes—typical behavior when a rate move is large enough to make a real dent in monthly payments.
A revitalizing market doesn't automatically mean an easy one. If demand outruns supply, price pressures can re-emerge, especially in tight inventory metros. Many analysts also warn that a more pronounced rate decline could unleash a wave of pent-up buyers, intensifying competition. For now, however, the mix looks more constructive than it has in years: borrowing costs are off their highs, prices have softened from the peak, and both shoppers and sellers are recalibrating to the new normal.
The upshot is a housing landscape that is no longer frozen. Builders are moving more product, buyers have a little more room to operate, and owners have fresh opportunities to improve their financing. If the rate drift continues and incomes hold up, the recovery in transactions should broaden—turning a tentative thaw into a true market spring.
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