A year ago, falling mortgage rates had buyers hoping 2026 would be the year housing finally loosened up. It hasn't worked out that way. Rates have climbed back above 7%, and the Federal Reserve is now debating whether to raise its benchmark rate again rather than cut it.
Where rates stand
The average 30-year fixed mortgage was 7.24% in Freddie Mac's weekly survey released October 29, 2026. That is down from 7.32% the week before but up from 6.17% a year earlier. The 15-year fixed averaged 6.60%, compared with 5.41% a year ago.
On a $350,000 loan, the difference between 6.17% and 7.24% is roughly $250 a month in principal and interest. Over a year that is about $3,000, which is enough to move a buyer down a price bracket or out of the market.
Why rates went up
Mortgage rates follow inflation expectations and long-term bond yields more than any single Fed decision. Inflation has moved the wrong way. Consumer prices were up 3.7% in September from a year earlier, according to the figures cited by NPR in its coverage of the Fed's October meeting, with higher energy prices tied to the conflict with Iran and demand for building materials and equipment from AI data-center construction among the pressures.
The Fed raised rates in September and, on October 28, held its target range at 3.75% to 4%. Two officials dissented in favor of another quarter-point increase, and many investors expect a hike at the December meeting. That outlook keeps upward pressure on mortgage rates.
What it is doing to home sales
Nationally, existing-home sales ran at a 3.99 million annual pace in September, according to the National Association of Realtors, down 2.2% from a year earlier. The median existing-home price was $417,500, up just 1.3%. Inventory rose to 1.60 million homes, or 4.8 months of supply, and the typical home took 33 days to sell.
In other words, prices are holding roughly steady while sales slow. Buyers who remain in the market have more choices and more time, and sellers are competing harder for each one.
What it means for you
If you are selling: fewer buyers qualify at 7%, so the ones who do are price-sensitive. Homes priced right from the first day still sell. Homes priced for last year's market tend to sit, and then sell for less after a price cut. Preparation and presentation matter more than they did when rates were lower.
If you are buying: higher rates come with something useful: room to negotiate. Ask about seller-paid closing costs or a rate buydown, which can lower your payment more than a small price reduction would. And if rates fall later, refinancing is an option; the price you negotiate now is not.
If you are waiting: no one can promise where rates will be next spring. A plan built on today's numbers, with a clear idea of what your home is worth, is better than a plan built on a guess.