Why Low Mortgage Rates Aren’t Fixing Home-Sales Slump — And What 2026 Could Bring
You would think that when mortgage rates come down, home-sales activity would shoot up. But the reality for 2025 is different: even though average rates have eased, home-sales remain sluggish. What’s behind the mismatch — and what might change in Western New York next year?
What’s Holding Back Sales?
1. The “lock-in” effect of low-rate mortgages Many homeowners locked into ultra-low mortgage rates (3–4 %) over the past few years simply don’t want to give them up. This reluctance keeps them off the market, limiting inventory and making moves harder for buyers who need more choice. 2. Affordability still strained Although rates have dipped, home-prices have remained elevated, and incomes haven’t kept pace. For many buyers in WNY, monthly payment considerations still feel tough — even with a “good” rate. 3. Economic and personal uncertainty With job markets, inflation, and economic signals sending mixed messages, both buyers and sellers are exercising caution. The decision to buy or sell is often delayed until more clarity emerges. 4. Inventory stuck at low levels Low turnover from the “lock-in” effect plus fewer sellers entering the market means fewer homes available. Even when listings rise, they’re often in less-desirable price bands or condition, limiting buyer options. 5. Buyer expectations vs actual deals Some buyers are waiting for “perfect homes” or big discounts. With pricing still firm in many areas, deals are scarce and patience is stretching longer than usual.
What Could Change in 2026?
Modest rate relief expected: Forecasts suggest the average 30-year mortgage may hover around the low 6-percent range next year — not dramatic but meaningful enough to move the needle. Sales may pickup modestly: With some rate relief + improved buyer confidence + slight inventory uptick, existing-home sales could grow 10-20% nationally. Locally in WNY, that could mean more activity and less competition for serious buyers. Affordability may ease—but slowly: Expect slower price growth (2-4%) rather than big jumps. That means buyers can act without fear of big premiums, and sellers benefit from stable conditions. Inventory could loosen: As more homes hit the market — thanks to pent-up sellers or more flexible economic conditions — buyers may finally see more options in suburbs of Buffalo, Niagara County, etc.
What That Means for Western New York
If you’re a buyer in Erie or Niagara County: now could be a good window. Lower rates + more choices = leverage. If you’re a seller: being priced and marketed right will matter more than ever. With more competition next year, waiting too long may reduce urgency of buyers. For both: positioning matters. Work with a local agent who understands WNY’s market forces — not just national headlines.
The Bottom Line
Lower mortgage rates alone aren’t enough to ignite a market. Sales remain sluggish because the ecosystem around them (supply, affordability, psychology) remains constrained. But with the right local conditions, 2026 shows promise for a shift. If you’re ready to buy or sell, this is a time to act smart — not wait out the whole cycle.
Ready to explore how this applies to your move in Western New York? Call Great Lakes Real Estate at (716) 754-2550. Let’s map your strategy.
