American Real Estate Association founder Jason Haber breaks down the state of the housing market and examines Redfin’s announcement of a ‘great real estate reset’ coming in 2026 on ‘The Claman Countdown.’
For the first time, the number of homeowners with mortgages above 6% has surpassed those with mortgage rates below 3%, according to Realtor.com’s latest report on the foreclosure effect.
The last time rates were below the 3% threshold was between July 2020 and September 2021. Rates have not fallen below this threshold since 1971. As of September 2022, rates remain above 6%, keeping potential sellers “locked in” to their current rates and keeping potential buyers away from the US. Due to limited supply and increased housing competition, housing prices remain high, increasing affordability challenges.
But that dynamic is starting to change as fewer homeowners have that low of a mortgage. For example, in the third quarter of 2025, 20% of outstanding mortgages had an interest rate of less than 3%, Realtor.com senior economist Hannah Jones wrote in a report on market dynamics.
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During the same period, 21.2% of outstanding loans had an interest rate of more than 6%.
The last rates that were below the 3% threshold were between July 2020 and September 2021. (Lindsey Nicholson/UCG/Universal Images Group via Getty Images)
About 31.5% of outstanding loans have interest rates between 3% and 4%. Meanwhile, 17.1% decreased from 4% to 5%. About 10.2% are between 5% and 6%, according to the data.
This emphasizes how homeowners are taking out loans at higher rates versus keeping older loans at lower rates, helping to reduce the “clotting effect” of the pandemic period.
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Jones believes that the re-rating shows that some households that had delayed moving in anticipation of lower rates jumped when rates softened, “making the timing feel more favorable despite still high borrowing costs.” And he believes some buyers may be able to lock in or refinance below 6%, increasing the share to 5%–6%.
About 31.5% of outstanding loans have interest rates between 3% and 4%. (Mario Tama/Getty Images)
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There is still a long way to go before there is a meaningful increase in housing supply. Jones told FOX Business that nearly 80% of outstanding mortgages still carry below-market rates, meaning those “homeowners will face much higher monthly payments if they sell and buy again, making them more reluctant to move.”
“Until a much larger portion of homeowners get out of subprime mortgages or rates decline materially, the market will continue to feel the impact of this long-term foreclosure,” Jones said.
An “Open House” sign outside a home in Washington, DC, US, on Sunday, Nov. 19, 2023. (Nathan Howard/Bloomberg)
The good news is that the market is moving in the right direction as housing supply has improved over the past year and is starting to ease affordability.
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In fact, more supply has put the national market in a “balanced” position, with some local markets considered a “buyer’s market,” according to Jones.
He credited new construction inventory and a new domestic share of inventory increases above pre-pandemic levels for helping to fill the gap.
