The U.S. housing market is showing signs of change in early 2026, as the long-standing “lock-in effect” begins to ease. For the past several years, this phenomenon—where homeowners with ultra-low historic mortgage rates remained in their homes rather than selling—created a significant inventory shortage. Homeowners with locked-in, low mortgage rates were hesitant to move, as doing so would mean giving up their favorable terms and taking on much higher rates in the current market.
However, recent data suggests a shift. As mortgage rates rise above 6%, they are now surpassing the number of homeowners with sub-3% rates. This shift has begun to reduce the financial disincentive for moving, encouraging more listings and providing an opportunity for market activity to pick up. Homeowners with mortgage rates above 6% are now less likely to face steep financial penalties if they decide to sell, especially as the market stabilizes.
Mortgage rates have started to stabilize, and there has even been a slight uptick in mortgage applications. This has the potential to increase buyer and seller activity in the coming months, contributing to more balanced market conditions. For real estate professionals, this could mean more listings and a higher volume of transactions as both buyers and sellers adjust to a changing market.
Realtors will need to adjust their strategies accordingly, using the current market dynamics to guide their clients. With inventory levels beginning to improve and more homeowners potentially listing their properties, agents should help clients navigate the shifting landscape. Counsel on timing and the latest market conditions will be crucial, as clients may be more inclined to list their homes if they see that the lock-in effect is loosening.
This change is not only important for those looking to buy or sell but also for real estate professionals who may see more opportunities for transactions as the market begins to find a more balanced rhythm. As the housing market continues to evolve, staying informed about mortgage trends, client concerns, and broader market shifts will be essential for realtors to successfully guide their clients in 2026.
