Lower mortgage rates and plateauing home prices mean the monthly payment on a typical mortgage is now 8.4% lower than it was a year ago, according to Zillow's January Market Report. Obviously, those with existing fixed-rate mortgages are unaffected.
"We're starting 2026 following three years that saw transactions bouncing along the bottom and affordability as a chronic struggle," said Mischa Fisher, chief economist at Zillow, in a statement released on Wednesday. "Our forecast for both sales and affordability this year is one of gradual improvement. January was a cautious first step along that path, as potential buyers and sellers dealt with severe winter weather in many major markets."
Home values are just 0.2% higher on average than they were a year ago. And recently they've been falling: by 0.4% month-over-month in January.
Geographical Variations in Home Affordability
As always with real estate data, there are considerable variations from the national average in different parts of the country. Looking at major metros, Zillow found prices still rising in January — though very slowly — in New York, NY (+0.2%), and Los Angeles, CA (+0.1%). Those are America's two biggest housing markets.
New Orleans, LA, and San Jose, CA, saw home prices holding steady in January. But everywhere else saw declines.
Among those with the sharpest drops in home prices in that month were:
- Buffalo, NY — -0.9%
- Austin, TX — -0.7%
- Pittsburgh, PA — -0.7%
- Detroit, MI — -0.6%
- Cleveland, OH — -0.6%
- San Antonio, TX — -0.5%
- Raleigh, NC — -0.5%
- Memphis, TN — -0.5%
Other metros in the survey experienced more modest falls.
Is Now the Moment for First-Time Buyers?
On the one hand, first-time homebuyers must be attracted by relatively low mortgage rates and falling home prices. Those are things they've been dreaming of for years.
On the other hand, other housing costs, such as homeowners insurance and property taxes, are still rising — in some places sharply. And who wants to own an asset that's currently depreciating, even if it's very likely indeed to begin appreciating again sometime soon?
The Wrong Questions
Jackie Kelly, a Realtor in South Carolina, thinks people pondering such things are asking themselves the wrong questions:
"For many buyers, the idea of timing the housing market feels like trying to predict the weather," Kelly wrote on HelloNation.com. "They watch interest rates, follow news headlines, and hope for prices to dip before making a move. In reality, finding the 'perfect time' to buy is rarely about market timing at all. It depends far more on your personal goals, finances, and readiness to settle into the right home.
"Buyers who pause in hopes of lower prices or interest rates often face higher costs later," Kelly continues. "A slight increase in rates can raise monthly payments, even if the home price itself stays similar. The result is that waiting for a 'better deal' may not actually save money in the long run."
Choosing YOUR Moment
Kelly's right. Vanishingly few experts expect mortgage rates to fall far this year, and one can always refinance if they do. And home prices are unlikely to drop fast enough to make a big difference to monthly payments. In any event, home prices tend to rise when mortgage rates fall, which moderates their benefit.
So, first-time buyers may prefer to make their move when it suits them best, not when some rare market conditions arise. Otherwise, they could find themselves waiting and renting for a very long time.
