Mortgage rates seem stuck — so what will bring back buyers? 

Mortgage rates keep falling — ever so slightly. With rates effectively remaining flat for the past few weeks, prospective buyers should be prepared for much of the same heading into the spring season.

The 30-year fixed-rate mortgage averaged 6.85% this week, according to the latest Freddie Mac survey. It notched down from last week's 6.87% average and has remained in a 20-basis-point range for five straight weeks. The current rates are similar to the averages seen last year around this time. 

The upside to this flattening out of rates? More certainty for consumers. "This stability continues to bode well for potential buyers and sellers as we approach the spring homebuying season," said Sam Khater, Freddie Mac's chief economist.

A sluggish first quarter

Despite optimism for a stronger sales year, 2025 has gotten off to a slow start. Altos Research data indicates that pending sales are about 3% behind last year's pace, said founder Mike Simonsen.

"If our forecast for home sales growth is going to succeed for this year, we're going to need to see mortgage rates drop in the next handful of months and drop far enough to move some buyers off the fence and into action," Simonsen said in a Feb. 20 webinar analyzing the current housing market.

Inflation continues to be a big driver of elevated rates, said Hannah Jones, Realtor.com's senior economist research analyst.

"As a result, hopeful homeowners are at an all-too-familiar crossroads and must decide whether to continue renting or to take the plunge into the housing market," Jones said, noting that it is still more affordable to rent than to buy a starter home in 48 of the 50 largest U.S. metros.

This is leading to a slowdown in home price growth. Altos estimates that median home prices are up 2% compared to a year ago, but if rates remain elevated, prices could decline, at least during some months. That happened twice in 2022, but it is unlikely to be a trend throughout the entire year, according to the company's data.

"Do these (prices) compress even further? I think it's a possibility, especially if we were to get tough inflation news that drives rates higher," Simonsen said.

What might get buyers off the fence

If buyers can accept elevated mortgage rates, there are some other factors working in their favor, according to the latest Redfin report.

For one, inventory is now at five months of supply as more new listings hit the market, suggesting a more balanced market. It's also a sign that weak demand isn't deterring sellers from listing their homes.

With more balance comes more negotiating power for buyers. The report finds the typical home is selling for 2% less than the asking price, the biggest discount in two years. Homes are also taking 57 days to go under contract, the longest period in five years.

"If a home needs work or it's priced too high, it's sitting on the market," said Cody Brownfield, a Redfin Premier agent in Cincinnati. "That's when a buyer has bargaining power. But updated homes that are priced right — especially those located in desirable neighborhoods with highly rated schools — are selling quickly, sometimes for tens of thousands of dollars over the asking price. It seems like every buyer is looking for the same type of house."

Mortgage applications continue to slow

Applications fell 6.6% week-over-week, with both refinance and purchase applications down by roughly the same amount, according to the Mortgage Bankers Association.

New construction homes are seeing a similar trend. In January, applications for new homes dropped 6% compared to a year ago, the first annual decline in two years. That seems to line up with waning builder confidence, which fell significantly in January.