Falling Mortgage Rates Make Homeownership Possible for Millions of Households

The average interest rate on a 30-year fixed-rate mortgage fell to around 6% last week, the lowest rate borrowers have seen in close to three years. Borrowers will not only enjoy lower monthly payments at that rate, but it also makes homeownership possible for millions more.

Even modest declines in mortgage rates can have a significant impact on housing affordability, pricing more households back into the market. New NAHB Priced-Out Estimates illustrate how changes in interest rates affect the number of households that can afford a median-priced new home.

To begin 2026, the 30-year fixed mortgage rate averaged 6.25%. At that rate, around 31.5 million households could afford a new home at the national median price of $413,595, per lender underwriting standards. A modest 25 basis-point rate reduction from 6.25% to 6% would lower the qualifying income threshold sufficiently to allow 1.42 million additional households to afford a median-priced new home.

This sizable affordability response reflects the underlying distribution of U.S. household incomes. Household incomes are heavily concentrated in the middle of the distribution, with many households near key affordability thresholds.

Approximately 79.8 million households earn less than $105,880, and an additional 14 million households earn between $105,881 and $132,350. When mortgage rates decline to near long-term averages (as they are now), the qualifying minimum income shifts downward into these densely populated income ranges, bringing a substantial number of households into the market.

In contrast, an equivalent 25 basis-point cut at higher interest rate levels has a smaller impact on affordability. For example, a decline from 7.75% to 7.5% would only price around 1 million households into the market. At higher rate levels, fewer households can quality for a conforming mortgage.

For more, read this blog post on NAHB’s economics blog, Eye on Housing.