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Zillow Research

Mortgage Rates Drift Lower During Government Data Blackout

Zillow maintains its expectation that mortgage rates will struggle to break below 6% in 2026

Mortgage Rates Tick Down Slightly

The ongoing government shutdown has delayed several major economic data releases, which may have contributed to the narrow range for mortgage rate movements in recent weeks. Still, markets are using alternative data sources to gauge the economy’s strength, the persistence of inflation, and the likely path of interest rates.

The Federal Reserve’s latest Beige Book, which aggregates anecdotal reports from regional Fed banks, described broadly flat activity and modest headcount reductions across most surveyed districts. Input costs remain elevated, but many firms are finding it harder to pass those increases on to consumers amid softer demand, particularly among lower- and middle-income households. While it’s uncertain whether the Beige Book shifted expectations for future rate cuts, the overarching theme of slowing growth continues to dominate the narrative.

With signs of softer economic momentum and a cooling labor market, mortgage rates may drift slightly lower through 2026. Still, Zillow expects the 30-year fixed rate to remain confined within the 6%–7% range observed in recent years. Substantial downward pressure on rates is unlikely for the remainder of 2025, though modest relief could emerge as 2026 unfolds.

Impact on the Housing Market

Even with modest rate relief, affordability remains a challenge for homebuyers. While home values have fallen in half of major metros in the last year, prices are still significantly higher than pre-pandemic. Still, for financially prepared shoppers, buyers currently have greater negotiating power than in previous years. Homes are staying on the market longer, giving potential buyers additional time to evaluate their choices.

Mortgage Rates Drift Lower During Government Data Blackout