Housing Market Update – July 2026

July 15, 2026

Will Mortgage Rates Go Down? Here’s What Homebuyers Should Know

Will mortgage rates go down? It’s one of the most common questions homebuyers are asking today. While no one can predict interest rates with certainty, current economic conditions suggest that mortgage rates may remain higher than many buyers had hoped for in the near term.

Inflation continues to run above the Federal Reserve’s long-term target, and ongoing global uncertainty—including events that can affect energy prices and the broader economy—continues to influence interest rates. While mortgage rates may fluctuate over the coming months, a significant drop is not expected in the immediate future.

Why Is the Housing Market Still So Competitive?

Mortgage rates are only part of the story. Housing inventory remains one of the biggest challenges facing today’s buyers.

Approximately 80% of U.S. homeowners have mortgage rates of 5% or lower, thanks to historically low rates available during the pandemic. Many homeowners are choosing to stay in their current homes rather than trade a low mortgage rate for today’s higher borrowing costs.

As a result, fewer homes are being listed for sale. Limited inventory means buyers often face more competition, helping to keep home prices elevated in many markets.

Should You Wait for Mortgage Rates to Fall?

Waiting for lower mortgage rates may seem like the obvious choice, but it’s worth considering the bigger picture.

If mortgage rates eventually decline, more buyers may re-enter the market, increasing competition for available homes. That could place additional upward pressure on home prices. On the other hand, buying sooner may allow you to secure a home before demand increases, with the possibility of refinancing if rates become more favorable in the future.

Every buyer’s situation is different, so it’s important to consider your budget, long-term plans, and financial goals (not just today’s interest rates).

What Does This Mean for Homebuyers?

While many experts expect the housing market to gradually rebalance over time as more homeowners decide to sell, this is likely to be a slow process rather than an overnight shift.

If you’re financially prepared to buy and have found the right home, today’s mortgage rates shouldn’t necessarily prevent you from moving forward. A home purchase is a long-term investment, and the right time to buy depends on your personal circumstances as much as market conditions.

Whether you’re buying your first home, upgrading to a larger space, or exploring your financing options, Lafayette Federal’s mortgage team is here to help you understand your choices and make an informed decision with confidence.