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The 30-year fixed mortgage has dropped to its cheapest level since September 2022, but January’s FOMC minutes show several officials openly discussing rate hikes — injecting fresh uncertainty into the housing outlook just as the spring buying season approaches.
Freddie Mac Data Confirms Sustained Decline
The benchmark 30-year fixed-rate mortgage averaged 6.01% for the week ending February 19, 2026, down eight basis points from the prior week’s 6.09% and a full 84 basis points below the 6.85% recorded a year earlier, according to Freddie Mac’s Primary Mortgage Market Survey. The 15-year fixed rate fell nine basis points to 5.35%, compared with 6.04% twelve months ago. The decline closely tracks the 10-year Treasury yield, which slipped to around 4.08% on Thursday — its lowest reading since late November 2025 — after a softer-than-expected Consumer Price Index print and a relatively optimistic jobs report. Sam Khater, Freddie Mac’s chief economist, noted that the lower rate environment is strengthening the financial position of existing homeowners, with refinance application activity more than doubling over the past year.
Mortgage Applications Rise, but Purchase Demand Remains Soft
The Mortgage Bankers Association reported a 2.8% seasonally adjusted increase in total mortgage applications for the week ending February 13, with refinance activity driving the gains. The Refinance Index rose 7% week-over-week and stood 132% above year-ago levels, marking the strongest refinancing week since mid-January and keeping demand in the highest range observed since early 2022. The refinance share climbed to 57.4% of all applications, up from 56.4% the prior week. Purchase applications, however, fell 3% on a seasonally adjusted basis, though they remained 8% above the same period last year. Joel Kan, the MBA’s vice president and deputy chief economist, attributed the pickup to the lowest mortgage rates in four weeks, while noting that Treasury yields ended the period lower as weaker retail sales and home sales data outweighed stronger-than-expected employment figures.
January Home Sales Plunge 8.4% — NAR Declares a ‘New Housing Crisis’
The rate improvement comes against a backdrop of deteriorating transaction volumes. Existing-home sales fell 8.4% in January to a seasonally adjusted annualized rate of 3.91 million units, well below the consensus forecast of 4.16 million and the slowest pace since December 2023, the National Association of Realtors reported on February 12. The decline — the steepest monthly drop since February 2022 — unwound gains from a three-year high of 4.35 million recorded in December 2025. NAR Chief Economist Lawrence Yun called the situation “a new housing crisis,” noting that despite affordability conditions reaching their most favorable level since March 2022 — driven by wage gains outpacing home price growth and rates sitting well below year-ago levels — supply constraints continue to lock Americans in place. Inventory stood at 1.22 million units at month’s end, equivalent to just 3.7 months of supply, far short of the six-month benchmark considered a balanced market. The median sale price reached $396,800, a record for January and up 0.9% year-over-year.
Fed Minutes Expose a Divided Committee
The Federal Open Market Committee held its benchmark rate steady at 3.50–3.75% on January 28 by a 10-2 vote, with Governors Stephen Miran and Christopher Waller — both Trump appointees — dissenting in favor of a quarter-point cut. But the minutes released on February 18 revealed a committee far more conflicted than the headline decision suggested. Several participants indicated they would have supported language explicitly acknowledging the possibility that rate increases could be appropriate if inflation remains above target. Some members argued that additional easing may not be warranted until disinflation is “firmly back on track.” The hawkish undertones contrast sharply with President Donald Trump’s repeated demands for rates as low as 1%, and they arrive as the Supreme Court’s landmark ruling striking down Trump’s tariff regime reshapes the inflation outlook. Futures markets are now pricing the next quarter-point cut for June at the earliest, with no more than two reductions expected for the full year.
What the Rate Trajectory Means for the Housing Market
The disconnect between falling rates and collapsing sales volumes underscores how deeply structural factors — chronic undersupply, the lock-in effect among homeowners with sub-4% pandemic-era mortgages, and elevated prices — continue to restrain activity. Analysts at TD Economics argue that January’s weakness likely reflects purchase decisions made in November and December, when rates were higher, compounded by unusually severe winter weather. Capital Economics noted that home purchase applications rose 8% in January to their highest level in three years, suggesting sales volumes should recover toward 4.5 million annualized in coming months. The MBA’s Builder Application Survey separately showed new-home purchase applications increasing 19% between December and January, consistent with single-family housing starts finishing 2025 at an elevated pace. Meanwhile, the rate outlook remains anchored to the 10-year Treasury, where the narrowing spread between government bond yields and mortgage rates — a dynamic playing out across global sovereign debt markets — could provide incremental relief even without aggressive Fed easing. By the end of 2026, consensus forecasts place the 30-year fixed rate between 5.90% and 6.30%, a range that may prove sufficient to sustain a gradual thaw in the frozen housing market, provided inventory conditions improve and the incoming Fed leadership under expected Chair Kevin Warsh does not destabilize the carefully balanced policy framework that Jerome Powell leaves behind when his term ends in May.
