As 2026 gets underway, one number is capturing the attention of consumers and REALTORS® across Alabama: mortgage rates. As of January 15, the average 30-year fixed mortgage rate dipped to 6.06% — its lowest level since September 2022. After several years of volatility, this decline is giving many would-be buyers and sellers a renewed reason to reenter the housing market, even as broader economic uncertainty lingers.

Lower borrowing costs are a welcome development. December’s average rate of 6.19% also marked the fourth consecutive month mortgage rates have remained below long-term averages. For consumers who paused their homeownership plans due to affordability concerns, these shifts may feel like a long-awaited opportunity.

The question is: Can lower rates alone overcome lingering concerns about prices, employment and overall economic stability?

Recent market data points to cautious optimism. Home transactions fell 3% month-over-month in December — a predictable dip during the holiday season. However, activity remained 2.9% higher than December 2024, reinforcing that underlying demand hasn’t disappeared — it’s simply seasonal.

Pricing trends reflect a market finding its footing. Alabama’s median sales price reached $245,615 in December, up nearly 16% year-over-year but down 2.5% from November. Paired with declining mortgage rates, this shift improves short-term affordability and could motivate buyers who have been waiting for more favorable conditions.

"It is possible the lower rates and reduced prices may entice buyers to make purchases even before the spring, which is when the home market heats up along with the weather,” said Alabama REALTORS® economist Evan Moore. “Once the traditional spring buying season begins, median home prices are likely to increase, potentially offsetting savings from a lower interest rate, so now is a good time to purchase a home."

While lower mortgage rates are improving affordability, broader economic uncertainty continues to influence consumer confidence. National job growth has slowed and lingering economic pressures continue.

New home construction is also facing pressure. Building permits were down 8% year-to-date in December, signaling fewer new homes are likely to enter the market in the early months of 2026. At the same time, elevated material costs and trade policies continue to constrain builders’ ability to expand supply, keeping upward pressure on home prices.

Together, these factors suggest that even as demand responds to lower borrowing costs, supply constraints may persist, complicating efforts to meaningfully improve affordability.

Alabama’s housing market is entering 2026 with both promise and complexity. Mortgage rates at three-year lows are providing fresh momentum, while listings and housing supply remain higher than last year. Prices have softened modestly, and days on market have increased, giving buyers more breathing room than in recent years.

At the same time, economic uncertainty and constrained new construction continue to shape consumer decision-making.

For REALTORS®, this moment calls for helping buyers and sellers evaluate timing, affordability and long-term goals. Lower rates may not eliminate economic concerns entirely, but they offer an important opening for informed decisions as the market moves toward the spring buying season.