Introduction
Mortgage rates have slipped below 6%, improving affordability and giving buyers a measurable increase in purchasing power, according to a new analysis from Zillow. The shift comes after years of elevated borrowing costs that sidelined many households, and Zillow expects further declines through 2026. Even with that relief, the company notes affordability remains strained, with typical payments still consuming a large share of median income.
Rates Move Into the High-5% Range
Recent weekly data put the average 30-year fixed-rate mortgage just under the 6% threshold, a level not seen consistently in several years. Observers also describe the move lower as more gradual than earlier short-lived dips, which can matter for buyer confidence if rates continue to ease rather than snap back quickly.
Zillow Estimates a $30,302 Boost in Buying Power
Zillow’s analysis suggests a median-income U.S. household can now afford a home priced around $331,483. That represents a gain of about $30,302 compared with last year and the strongest affordability position since March 2022 by this measure. Zillow also estimates that roughly 82,300 additional homes have moved into the affordable range for a typical median-income buyer over the past year.
The improvement reflects a combination of factors: lower mortgage rates relative to last year, a leveling-off in home prices, and modest household income growth. Zillow also reports that the monthly principal-and-interest payment on a typical home, assuming 20% down and excluding taxes and insurance, is about 8.4% lower than a year ago.
Affordability Still Tight Despite the Relief
Even with a bigger budget, Zillow says a median-income household would still need to devote about 32.3% of income to the typical mortgage payment, highlighting that affordability remains pressured. The added $30,000 of buying power can expand choices and reduce forced compromises, but it does not reset the market to a broadly affordable environment for all buyers, especially in higher-cost metros.
Zillow Expects Rates to Keep Falling Through 2026
Zillow forecasts mortgage rates will continue to drift lower through 2026, which would further increase purchasing power if home prices remain stable. The firm frames the current moment as a potential turning point for spring 2026, with lower rates and better inventory availability expected to draw more buyers back into the market.
Conclusion
Mortgage rates falling below 6% are improving affordability at the margin, lifting the purchasing power of median-income households by about $30,302 compared with last year. Zillow expects additional rate declines through 2026, which could further support buyer activity. Still, affordability remains strained, and the durability of this shift will depend on how rates, inventory, and home prices evolve together.
