New Year’s Eve revelers may have even more to celebrate this year if they’re also potential homeowners. According to Freddie Mac, mortgage interest rates across the nation have dropped to their lowest levels of the year.
In a statement, Freddie Mac revealed that interest rates on 30-year fixed-rate mortgages averaged 6.15 percent as of Dec. 31, dropping from 6.18 percent just a week ago. This same time last year, the 30-year fixed-rate mortgages averaged 6.91 percent.
“After starting the year close to 7 percent, the average 30-year fixed-rate mortgage moved to its lowest level in 2025 this week, an encouraging sign for potential homebuyers heading into the new year,” Sam Khater, Freddie Mac’s chief economist said in the statement.
Following the trend, interest rates on 15-year fixed-rate mortgages also declined to an average of 5.44 percent, down from 5.50 percent last week. Last year 15-year fixed-rate mortgages averaged 6.13 percent.
Realtor.com senior economist Joel Berner believes mortgage rates will remain in this range for some time.
“There is little indication that the Federal Reserve will make any major changes to interest rates in January, and the market is responding favorably to a period of relative stability,” he said in a Dec. 31 statement.
The Federal Open Market Committee has planned its next meeting for Jan. 27–28, 2026.
Blaming lack of affordability as the primary constraint on the 2025 housing market, Berner noted that the mid-6 percent interest ranges kept home prices elevated and resulted in many potential buyers remaining on the sidelines. With today’s news from Freddie Mac, he said, 2026 could be a year of rebounding for the housing market.
“If this momentum continues into the peak buying season of 2026, we could see much stronger sales figures than we saw for much of 2025,” he said. “Already, pending home sales have responded to the relief from mortgage rates and are helping the market to pick up steam through what is traditionally the slowest part of the year.”
Realtor.com recently reported that pending homes sales experienced a 3.3 percent month over month increase, while contract signings were up annually by 2.6 percent year over year.
Meanwhile, the average home price nationally continued to rise at a slow pace in October. A new S&P Global report shows that the Cotality Case-Shiller U.S. National Home Price NSA Index posted a 1.4 percent annual gain in October—an uptick from a 1.3 percent rise in September.
“October’s data show the housing market settling into a much slower gear, with the National Composite Index up only about 1.4 percent year over year—among the weakest performances since mid-2023,” Nicholas Godec, head of Fixed Income Tradables & Commodities at S&P Dow Jones Indices, said in the report.
“In real terms, that gap implies a slight decline in inflation-adjusted home values over the past year.”
Regionally, both the Northeast and Midwest markets took the lead, with Chicago reporting a 5.8 percent price increase and New York a 5 percent. Sunbelt cities such as Tampa and Phoenix saw a decline of 4.2 percent and 1.5 percent, respectively. Overall, prices in 16 of 20 markets declined month over month in October.
“These traditionally stable Midwestern and Northeastern metros have sustained solid growth even as broader conditions soften,” Godec added.
He attributed the drop in the Sun Belt’s home price indexes to oversaturated markets. “It’s a stark reversal from the pandemic boom, as the markets that were once ‘pandemic darlings’ are now seeing the sharpest corrections while more traditional metros continue to post modest gains.”
Other notable metro areas that experienced October declines in home price indexes include Boston, Seattle, Cleveland and Denver.
Godec noted that while inflation continues to outpace home price gains, the silver lining may be more affordable options, as prices and mortgage rates become more balanced.
