Housing affordability remains a critical challenge nationwide, and mortgage rates continue to play a central role in shaping homebuying power. Although rates have declined from the recent peak of about 7.6% in 2023 to around 6.01% as of February 19,2026, they remain elevated relative to typical levels in the 2010s. During that decade, mortgage rates generally ranged between 4% and 5%. They also remain well above the historic lows reached during the pandemic. Even modest declines in mortgage rates can have a significant impact on housing affordability, pricing more households back into the market. New NAHB Priced-Out Estimates illustrate how changes in interest rates affect the number of households that can afford a median-priced new home.
At the beginning of 2026, with the average 30-year fixed mortgage rate at 6.25%, around 31.5 million households could afford a median-priced new home at $413,595. This requires a household income of $124,336 by the front-end underwriting standards. A modest 25 basis-point rate reduction from 6.25% to 6% would lower the qualifying income threshold sufficiently to allow 1.42 million additional households to afford a median-priced new home in 2026.
This sizable affordability response reflects the underlying distribution of U.S. household incomes. Household incomes are heavily concentrated in the middle of the distribution, with many households near key affordability thresholds. Approximately 79.8 million households earn less than $105,880, and an additional 14 million households earn between $105,881 and $132,350. When mortgage rates decline, the qualifying minimum income shifts downward into these densely populated income ranges, bringing a substantial number of households into the market.
In contrast, an equivalent 25 basis-point cut at higher interest rate levels has a smaller impact on affordability. For example, a decline from 7.75% to 7.5% would only price around 1 million households into the market. At higher rate levels, fewer households remain near the margin of qualification.
Overall, the estimates demonstrate that modest mortgage rate relief at current levels can translate into significant gains in housing affordability, highlighting the importance of mortgage interest rates for prospective homebuyers and the housing market.
