If you’re wondering whether mortgage rates will fall enough to make buying a home affordable in 2026, you’re not alone.
According to a 2025 report from Zillow, mortgage rates would need to fall more than four percentage points from today’s 6.11% average to make the typical U.S. home affordable for a median-income family.
That means rates would likely need to drop below 4% — and possibly even lower — to restore true national affordability.
But here’s the bigger story: housing affordability in 2026 depends far more on local home prices than national mortgage rates.
Many buyers are waiting for lower interest rates. But Zillow’s research shows that even if rates dropped significantly, affordability challenges would remain in many cities.
Housing affordability is typically defined as spending no more than 30% of household income on housing costs. At current home prices and mortgage rates above 6%, the typical U.S. home exceeds that threshold for the median-income family.
Even if rates fell to 4%, affordability would still be strained in high-cost metro areas.
Key takeaway: Lower mortgage rates help — but they don’t solve high home prices.
In some major U.S. cities, home prices are so elevated that even a 0% mortgage rate wouldn’t make the typical home affordable based on local median incomes.
According to Zillow, high-cost housing markets include:
Boston real estate market
Seattle housing market
New York City real estate
Los Angeles home prices
Miami housing market
In these cities, the issue isn’t just mortgage rates — it’s the gap between incomes and home values.
That’s why even dramatic rate cuts wouldn’t immediately restore affordability in these markets.
On the other hand, several U.S. cities remain relatively affordable even with mortgage rates above 7%, largely because home prices are significantly lower.
Examples include:
Pittsburgh – Approx. $231K average home value
Birmingham – Approx. $133K average home value
Detroit – Approx. $76K average home value
In these markets, housing costs align more closely with local incomes, making homeownership achievable even if rates don’t fall dramatically.
This highlights a critical 2026 housing market trend:
Real estate affordability is local — not national.
If you’re waiting for mortgage rates to drop before buying:
Rates may not fall enough to fully restore affordability nationwide.
In high-cost markets, home prices — not rates — are the main challenge.
In more affordable regions, today’s rates may still allow sustainable homeownership.
Instead of focusing solely on national mortgage rate headlines, buyers should evaluate:
Local home price trends
Median household income in their area
Inventory levels
Long-term housing goals
For sellers, local affordability conditions will directly impact buyer demand.
High-cost metro areas may continue to see affordability pressure.
Lower-cost markets may remain competitive even if rates stay elevated.
Pricing strategy will be critical in rate-sensitive markets.
Understanding your local housing market conditions will matter far more than watching national rate predictions.
The biggest myth in today’s real estate market is that lower mortgage rates alone will fix affordability.
The data from Zillow makes one thing clear:
Home prices relative to income determine affordability more than interest rates alone.
There is no single U.S. housing market — only thousands of local ones.
If you’re considering buying or selling in 2026, the smartest move isn’t waiting for headlines to change. It’s understanding how affordability works in your specific market.
