Mortgage rates fall to 5.98%—why many buyers are still priced out

What just happened with rates

Mortgage rates finally cracked a headline threshold. Freddie Mac’s Primary Mortgage Market Survey (PMMS) put the average 30-year fixed-rate mortgage at **5.98% as of February 26, 2026**, down from 6.01% the prior week. The 15-year fixed averaged 5.44%. [freddiemac.com]

For many buyers and sellers, "under 6%" is less about the precise basis points and more about psychology—an easier number to underwrite mentally when comparing today’s payment to 2020–2021 memories. But the math still matters more than the milestone.

Why cheaper money doesn’t equal cheap housing

A move from 6.01% to 5.98% helps, but it’s a small change relative to the payment shock that happened when rates rose sharply off the pandemic-era lows. In markets where prices remain high versus incomes, the monthly payment is still the limiting factor.

That’s why a rate dip can coexist with a market that still feels “stuck”: buyers can see financing improve while running into high list prices, limited options, and a shortage of lower-cost inventory.

The affordability pyramid: where the market breaks

NAHB’s 2026 priced-out analysis translates affordability into a simple visualization: at a 6% mortgage rate assumption, **52% of U.S. households (about 70 million) cannot afford a $300,000 home**. NAHB also estimates the **median price of a new home is around $410,000 in 2026**. [eyeonhousing.org]

The pyramid highlights the bottleneck at the lower end of the market. Under NAHB’s underwriting assumptions, the minimum income to purchase a $200,000 home at 6% is $55,500—leaving many households below the line even for homes that are increasingly scarce in many regions. [eyeonhousing.org]

Lock-in and low turnover are still limiting listings

Even if buyer demand perks up, supply can’t respond quickly if existing homeowners don’t list. One key reason is the “lock-in” effect: many owners have mortgages well below today’s rates. AP News reported, citing Realtor.com, that **nearly 69% of mortgaged U.S. homes have a fixed rate of 5% or lower**—a powerful incentive to stay put. [apnews.com]

Lower rates may slowly thaw that freeze, but lock-in doesn’t disappear the moment the 30-year average prints a 5-handle. Sellers often need a much bigger payment reduction (or a life event) to make a move pencil out.

Affordability ripple effects show up in remodeling

When turnover stays low, the normal “move and remodel” cycle slows. Realtor.com tied affordability pressures to Home Depot’s latest earnings commentary, noting consumers are cautious and pulling back from large projects, with historically low housing turnover since 2023 acting as a headwind for certain home-improvement categories. [realtor.com]

This is a reminder that affordability isn’t only a homebuying issue—it can ripple through the housing ecosystem, influencing renovation timing and spending behavior.

What to watch next

A sub-6% mortgage rate can bring more shoppers off the sidelines, but whether that translates into closed sales depends heavily on inventory—especially at entry-level price points. If demand returns faster than supply, price pressure can offset some of the rate benefit. [apnews.com]

Over the next several weeks, watch: (1) whether rates stay below 6%, (2) whether purchase demand responds more than refinances, and (3) whether resale inventory builds meaningfully into spring.