Key Takeaways
- The 30-year fixed mortgage rate fell below 6% for the first time since 2022 — a big psychological threshold for buyers sitting on the sidelines.
- Nationally, active inventory is up 7.1% year over year and the median listing price has fallen for 18 consecutive weeks. Buyers have more leverage than they’ve had in years.
- The Fed’s preferred inflation gauge — core PCE — held at 3% in December, keeping the Fed on hold. Don’t expect rate cuts anytime soon.
- Housing affordability remains strained: a median-income household must devote 42% of monthly earnings to a mortgage, taxes, and insurance.
- Current interest rates available with Mortgage Craft are at the bottom of the email.
Rates Just Crossed a Big Threshold — Here’s What It Means
The headline this week: mortgage rates fell below 6% for the first time since September 2022. The average 30-year fixed rate came in at 5.98% according to Freddie Mac — a meaningful drop from the 7%+ highs we saw last January.
Here’s why this matters more than just the number: it’s a psychological shift. Industry leaders are saying that once buyers see a “5” at the front of their rate, they’re willing to act. As Rocket’s Chief Business Officer Bill Banfield put it: “So if you can get into that 5% zone, they’re willing to do it.”
That said, don’t expect a flood of activity overnight. Existing home sales fell 8.4% in January — the biggest monthly drop in nearly four years — though much of that was blamed on bad weather. The bigger headwinds are job confidence and home prices that are still near record highs.
The bottom line for Lancaster buyers and realtors: The window is open. Rates at these levels give buyers meaningful purchasing power. With rates around 6% in January, a median-income household could afford a home up to $331,483 — the highest price point since 2022 per Zillow. That’s real movement.
What the Fed Is Watching — And Why It Matters for Your Rate
Here’s the honest picture on interest rates: the Fed isn’t cutting anytime soon.
The Fed’s preferred inflation measure — the Personal Consumption Expenditures (PCE) index — rose to 2.9% in December, with core PCE (excluding food and energy) ticking up to 3%. That’s moving in the wrong direction relative to the Fed’s 2% target.
Some Fed officials at the January meeting even floated the idea that future rate increases could be on the table — not just cuts.
The next critical data point: January PCE drops on March 13. The Fed meets March 17–18. Economists are projecting core PCE will hold at 3% or even tick up to 3.1%. That means the Fed will stay on hold, and mortgage rates will likely stay in the high-5s to low-6s range for the foreseeable future.
The Mortgage Bankers Association forecasts an average rate of 6.1% for 2026. Fannie Mae is calling for 6.0%. In other words, what we know today makes it “fairly unlikely rates will move materially from the low 6s or high 5s,” per Chase Home Lending.
For buyers: Lock in when you find the right home. Don’t try to time the bottom.
For those refinancing: If you bought in 2023 or early 2024 above 7%, this is worth a conversation.
The National Housing Market: Buyers Are Getting the Upper Hand
According to Realtor.com‘s weekly data for the week ending February 21, 2026, the shift toward buyers is well underway:
- New listings were up 3.6% year over year — reversing a negative trend that had persisted through early 2026.
- Active inventory climbed 7.1% year over year, giving buyers more options than they’ve had in years.
- Homes are sitting longer: the median home spent 68 days on the market — 5 more days than this time last year.
- Median listing price fell 2.4% year over year — the 18th consecutive week of flat or negative price growth. Price per square foot is also down, which tells us this is a real price correction, not just a mix of smaller homes hitting the market.
And from Redfin’s national data for January 2026:
- Median sale price: $422,980 (+1.1% YoY — still positive, but the pace is cooling)
- Homes sold above list price: 20.8% (down 1.7 points YoY)
- Homes with price drops: 17.4% (up from 16% last year)
What does this mean for Lancaster County?
Lancaster’s Northeast market tends to hold tighter than national averages — we’ve seen that consistently. But the national trends are the tide, and the tide is shifting toward buyers. If you’re a buyer who has been waiting, the combination of lower rates and more inventory and more seller flexibility is as good as it’s been in years.
If you’re a seller: pricing competitively matters more than ever. Homes that are priced right are still moving. Homes that aren’t are sitting.
Thinking about making an offer? At Mortgage Craft, we can get you pre-qualified quickly so you’re ready to act when the right home hits the market. Reach out and let’s talk strategy.
What the Fed Is Watching — And Why It Matters for Your Rate
Here’s the honest picture on interest rates: the Fed isn’t cutting anytime soon.
The Fed’s preferred inflation measure — the Personal Consumption Expenditures (PCE) index — rose to 2.9% in December, with core PCE (excluding food and energy) ticking up to 3%. That’s moving in the wrong direction relative to the Fed’s 2% target.
Some Fed officials at the January meeting even floated the idea that future rate increases could be on the table — not just cuts.
The next critical data point: January PCE drops on March 13. The Fed meets March 17–18. Economists are projecting core PCE will hold at 3% or even tick up to 3.1%. That means the Fed will stay on hold, and mortgage rates will likely stay in the high-5s to low-6s range for the foreseeable future.
The Mortgage Bankers Association forecasts an average rate of 6.1% for 2026. Fannie Mae is calling for 6.0%. In other words, what we know today makes it “fairly unlikely rates will move materially from the low 6s or high 5s,” per Chase Home Lending.
For buyers: Lock in when you find the right home. Don’t try to time the bottom.
For those refinancing: If you bought in 2023 or early 2024 above 7%, this is worth a conversation.
The Bigger Economic Picture
The Wall Street Journal’s year-one economic scorecard on the Trump administration paints a mixed picture — and it has real implications for housing:
- Jobs: U.S. employers added only 181,000 jobs in all of 2025 — the lowest outside a recession in more than two decades. January 2026 showed improvement (130,000 jobs added), but much of the growth was concentrated in healthcare.
- Unemployment: Held surprisingly low at 4.3% — this is low by historical standards, largely because immigration slowed, shrinking the labor pool.
- Inflation: CPI sits at 2.4% — lower than a year ago, but the Fed’s PCE gauge is stickier at 2.9–3%.
- Housing affordability: A median-income household now devotes 42% of monthly income to housing costs — slightly improved from 44% a year ago, but still historically burdensome.
- GDP growth: The economy grew 2.2% in 2025 — slower than 2024, and the slowest pace since 2022.
The takeaway for our clients: the economy is still growing, but cracks are forming. Job anxiety is real. Many buyers are hesitant, not because they can’t qualify, but because they’re unsure about job security. If that description fits someone you know, it’s worth having a conversation about what they actually qualify for — sometimes knowing the numbers helps people make more confident decisions.
