U.S. Housing Market Stabilises as Rates Return to Historical Norms

• Mortgage rates between 5–7% align with long-term U.S. averages

• Gap narrows between ultra-low and higher-rate mortgages, easing inventory pressure

• Buyers encouraged to look beyond rates to affordability and long-term value

The U.S. housing market is gradually settling into a more stable phase as mortgage rates return to historically typical levels, according to Chris Kelly, CEO of HomeServices of America. Industry leaders say current conditions reflect normalization rather than disruption.

For much of the past three years, housing conversations have centered on whether mortgage rates might fall back to pandemic-era lows near 3 percent. However, experts note those figures were driven by extraordinary economic measures during COVID-19 and do not represent long-term market behavior.

“When viewed through a historical lens, today’s market looks far more traditional,” Kelly said. “Interest rates are just one part of the equation. Housing decisions are shaped by affordability, equity, mobility, and personal life stages.”

Data from the past three decades shows that the most common range for a 30-year fixed mortgage in the U.S. has been between 5 and 7 percent, with an average midpoint around 6 to 6.5 percent. The ultra-low rates seen in the 2010s and during the pandemic are now widely regarded as temporary exceptions.

A key shift is also underway in the structure of outstanding mortgages. For the first time since COVID, the number of home loans above 6 percent is now roughly equal to those below 3 percent. This change is gradually easing the “lock-in effect,” where homeowners were reluctant to sell due to extremely low existing rates.

In addition, many homeowners with low primary mortgages have tapped into their property equity through secondary loans or credit lines, often at rates exceeding 7 percent. This has reduced the financial advantage of staying put and is contributing to a slow but steady return of housing inventory.

Rather than triggering a sudden surge in listings, the market is experiencing a measured adjustment. Industry professionals say this environment favors informed decision-making, realistic pricing, and transparent communication with buyers.

Affordability discussions are also expanding beyond interest rates alone. Buyers increasingly consider monthly payments, accumulated equity, mobility needs, lifestyle preferences, and long-term financial goals before making housing decisions.

Kelly emphasized that sustainable housing markets are built on balance. “Markets operating within historical norms tend to be more resilient over time. This rewards preparation and professionalism across the industry while helping consumers make confident, well-informed choices.”

As the U.S. housing sector continues to recalibrate, experts expect market messaging to move away from rate-focused narratives and toward broader conversations around value, stability, and long-term homeownership planning.