Mortgage Rates Drift Lower, but Spring Shopping Season Might Still See Rates Above 7%

In short: Mortgage rates are easing from their recent peak, but Zillow expects them to stay above 7% through mid-2027 — likely leading to a chillier 2027 spring home shopping season.

Mortgage rates continue to retreat

Mortgage rates continue their decline from the recent peak, though they remain challenging for housing affordability.

As of November 4, oil prices fell on hopes of easing geopolitical tensions and markets are weighing the potential effects of restrictions on data center construction. Whether the forces keeping bond yields elevated — government deficits, geopolitical impacts on prices, and corporate borrowing to fund AI spending — could sustainably fade remains an open question. Zillow expects mortgage rates to remain above 7% for the rest of 2026 through mid-2027, presenting a possible headwind for next year’s home shopping season. 

What’s the impact on housing? 

Challenging affordability continues to weigh on the for-sale market. Newly pending sales, a leading indicator of future closings, fell 17% in October, the biggest year over year drop since 2023. 

At the same time, rental demand skyrocketed, with rental engagement per listing (as measured by ZORDI) growing 22% in October compared to last year, as elevated borrowing costs push would-be buyers to rent instead. 

With little relief in the mortgage rate outlook, the spring 2027 home shopping season could arrive with rates still above 7%, which may hamper activity.