Jason Haber, co-founder of the American Real Estate Association, explains the state of the housing market and assesses Redfin’s announcement of a “major housing reset” in 2026 on “The Claman Countdown.”
For the first time, the number of homeowners with mortgages above 6% exceeds the number of homeowners with interest rates below 3%, according to Realtor.com’s latest report on the lock-in effect.
The last time interest rates were below the 3% threshold was between July 2020 and September 2021. Interest rates have not fallen below this threshold since 1971. Since September 2022, interest rates have remained above 6%, locking many potential sellers into their current rates and sidelining potential buyers, hampering U.S. housing supply. Limited inventory and increasing competition for homes have kept home prices high, exacerbating affordability issues.
But that dynamic is starting to change as fewer and fewer homeowners have such low borrowing rates. For example, in the third quarter of 2025, 20% of outstanding mortgages had interest rates below 3%, Realtor.com senior economist Hannah Jones wrote in a report on changing market dynamics.
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In the same period, 21.2% of outstanding mortgages had an interest rate above 6%.
The last time interest rates were below the 3% threshold was between July 2020 and September 2021. (Lindsey Nicholson/UCG/Universal Images Group via Getty Images)
About 31.5% of outstanding mortgages have an interest rate between 3% and 4%. Meanwhile, 17.1% falls within the 4% to 5% range. According to the data, about 10.2% is between 5% and 6%.
This underlines how homeowners are taking out mortgages at higher interest rates rather than holding older loans at ultra-low rates, reducing the pandemic-era “lock-in effect.”
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Jones believes the rebalancing shows that some households that had postponed moving in anticipation of lower interest rates jumped when rates softened, “making the timing feel more favorable despite still high borrowing costs.” She also believes some buyers were likely able to hold or refinance below 6%, increasing the share from 5% to 6%.
About 31.5% of outstanding mortgages have an interest rate between 3% and 4%. (Mario Tama/Getty Images)
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“Until a much larger share of homeowners cancel their ultra-low interest loans or rates drop substantially, the market will continue to feel the impact of this long-term lock-in,” Jones said.
An ‘Open House’ sign outside a home in Washington, DC, US, on Sunday, November 19, 2023. (Nathan Howard/Bloomberg)
The good news is that the market is moving in the right direction, with housing supply improving over the past year and the affordability crisis starting to ease.
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In fact, the additional supply has brought the national market into “balanced” territory, with some local markets classed as a “buyer’s market,” according to Jones.
She said new build stock and the share of new homes in stock had risen above pre-pandemic levels to help fill the gap.
