Half of U.S. Mortgages Sit at 4% or Less as 20.8% of Listings Cut Prices
The American housing market is being pulled in two directions by the same interest rate. The Freddie Mac 30-year fixed average reached 7.28% on October 1, 2026, the highest reading since November 2023 and up from 6.34% a year earlier. Meanwhile, Federal Reserve Governor Michael Barr said on September 23, 2026 that about half of outstanding mortgages still carry a rate of 4% or less, and that nearly 80% sit below 6%, based on second-quarter 2026 National Mortgage Database figures.
That gap explains much of the supply picture. In Federal Housing Finance Agency data as of the fourth quarter of 2025, 50.6% of outstanding mortgages were below 4% and 21.9% were at 6% or above. The sub-4% share has fallen from more than 65% at its first-quarter 2022 peak, so the lock-in effect is easing, but slowly. An owner with a 3% loan faces a much higher payment if they sell and buy again at roughly 7%, and many are choosing not to move.
Yet the market is not frozen. Realtor.com's September report, published September 30, counted 1,161,615 active listings, up 5.4% year over year, though still 9.1% below typical pre-pandemic levels. The median time on market was 61 days, and 20.8% of listings carried a price cut, the highest September share since 2018. The median list price was $419,250, down 1.4% from a year earlier, the eleventh straight month of annual declines. Homes under contract fell 4.1% year over year.
Redfin's four weeks ending September 13 tell a consistent story using a different method. Pending sales fell to 299,126, the lowest level in nearly three years. The median listing took 46 days to go under contract, unchanged from a year earlier, and homes sold for 98.6% of list price on average, up slightly from 98.4%. Still, 25.1% of homes sold above asking, which shows well-priced inventory continues to clear. The two days-on-market figures are not directly comparable because the firms measure differently, but both describe a market where sellers are negotiating more than they were.
The near-term picture is limited supply from locked-in owners alongside softening buyer demand at higher rates. For investors, that favors disciplined underwriting and patience on price. For lenders, it means more files where leverage and coverage ratios sit close to program thresholds. Both groups benefit from knowing the numbers early, and from rechecking them ahead of the Federal Reserve's October 28 decision.