U.S. Housing Market Shifts as Mortgages Above 6% Surpass Those Below 3%

U.S. Housing Market Experiences a Major Shift

In a pivotal transformation of the U.S. housing market, the share of homeowners with mortgage rates exceeding 6% has officially surpassed those with rates below 3%. This change, noted by Realtor.com's recent analysis, signifies a meaningful turning point following years of extremely low borrowing costs, which characterized the pandemic era. As of the third quarter of 2025, approximately 21.2% of outstanding mortgages now carry rates of 6% or more, a slight increase compared to the 20.0% with rates under 3%. This shift is not just a statistic; it suggests deep changes in homeowner behavior, market dynamics, and the overall supply of housing.

A New Mortgage Landscape

The trends reveal that the era of ultra-low mortgage rates is waning. Starting from July 2020, when the 30-year fixed mortgage rate fell below 3%, such conditions persisted until September 2021. This historic moment marked the only time rates dipped below this threshold since 1971, leaving a legacy that is now being challenged by rising costs. While mortgage rates remained above 6% since September 2022, even a slight easing to the low 6% range by the end of 2025 suggests potential influences on market activity and inventory conditions.

Danielle Hale, Chief Economist at Realtor.com, states, "This crossover reflects a gradual resetting as some households transition from low-rate mortgages to higher-rate ones. Additionally, new buyers continue to enter the market despite ongoing constraints due to rate lock-ins."

This gradual shift in rates has made many current mortgage holders think twice about selling their homes because doing so could mean increasing their monthly payments significantly. For instance, moving from one median-priced home to another could increase monthly obligations by nearly $1,000, creating a strong disincentive for many homeowners to sell at prevailing market conditions.

Persistent Low-Rate Effect

Despite the increasing share of high-rate mortgages, it's notable that over 51.5% of outstanding mortgages are still anchored at or below the 4% threshold; nearly 69% remain at or below 5%. Such a concentration of low-rate mortgages explains why many homeowners have remained reluctant to list their homes for sale amidst an evolving market.

The implications are massive. Although the share of mortgages above 6% has grown from 16.9% in the third quarter of 2024 to 21.2% in the third quarter of 2025, significant factors continue to drive market behavior. Life transitions such as marriage, growing families, and job relocations ensure that buyers remain active, indicating enduring demand despite higher borrowing costs.

Housing Supply Dynamics

Interestingly, improvements in housing supply have begun to create a more balanced market. Increased inventories in various markets have led to favorable conditions for buyers, especially in areas where homes sell quickly due to robust competition. However, affordability still remains a critical concern, particularly in lower-priced neighborhoods. Hale emphasizes, "Even with rates elevated, a small drop in mortgage rates could spur additional homebuying activity. This, in turn, would encourage sellers to participate in the market, alleviating price pressures and enhancing inventory levels."

The Rate Lock-In Phenomenon

A significant proportion of the current market still reflects a 'lock-in' effect, where approximately 80% of outstanding mortgages are below 6%. This enduring sentiment of rate lock-in seemingly holds back even more sellers from entering the market, as they remain content with their low-rate mortgages. Nonetheless, with the above circumstances changing, the crossover of high-rate mortgages now surpassing those at ultra-low levels might suggest a loosening grip on the market, paving the way for potential adjustments.

Conclusion

As we move forward into 2026, the implications of this mortgage rate shift will undoubtedly shape the future landscape of U.S. real estate. Increased mortgage rates are altering buyer behavior, reshaping market dynamics, and challenging long-standing norms within the housing sector. Realtor.com's insight highlights a vital focus for potential sellers and buyers alike, as adapting to this evolving environment becomes increasingly necessary.