This week’s housing data reveals a market frozen in contradiction.
Mortgage rates fell again—now at 6.01%, the lowest since September 2022. Refinance applications more than doubled. The rental market officially tipped in favor of tenants, with 44 of 50 major metros now renter-friendly. An additional 5.5 million households qualify for mortgages at today’s rates compared to a year ago.
And yet: pending home sales fell. Again.
Meanwhile, institutional investors are increasing transaction volumes. Lenders are “hungry” to put debt on multifamily assets. Investment activity is picking up, not slowing down.
So what’s happening?
Two different markets are emerging. One where informed capital is moving aggressively. And one where consumers are waiting for conditions that have already arrived.
Let’s break down what happened this week and what it means for your next move.
The Rental Market: It’s Official—The Power Has Shifted
The U.S. rental market has officially tipped in favor of tenants.
According to Realtor.com’s January 2026 Rent Report released this week, the average rental vacancy rate across the nation’s 50 largest metros climbed to 7.6% in 2025, up from 7.2% in 2024. That’s a multi-year high.
What does that mean in practical terms? 44 out of 50 major metros are now classified as either renter-friendly or balanced. Only six markets still favor landlords.
As vacancy rates rose, rents adjusted downward. January marked the 29th consecutive month of year-over-year rent declines, with the national median asking rent falling 1.5% to $1,672.
“After years of being squeezed by limited inventory, renters are finally seeing the supply wave work in their favor,” said Danielle Hale, chief economist at Realtor.com. “This shift doesn’t just mean lower prices; it means that renters today have more options and more bargaining power.”
Let that sink in: 29 consecutive months of falling rents. This isn’t a blip. This is a structural shift.
Why is this happening? The apartment construction boom of 2023-2024 flooded the market with new units faster than demand could absorb them. Developers added more than 700,000 apartments in 2024 alone—a 40-year high. While new construction is finally slowing (completions are projected to drop 24% in 2026 according to Yardi Matrix), the excess inventory built over the past two years is still working its way through the system.
And it’s creating real negotiating power for renters right now.
What This Means for You:
If you’re renting, this is not the time to accept your landlord’s renewal offer at face value. The data is clear: landlords need tenants more than tenants need landlords in 44 of the 50 largest markets.
What to ask for:
First month free or multiple months free. Increasingly common in competitive markets.
Reduced rent for the first 6-12 months. Landlords would rather lock you in at a lower rate than risk sitting vacant.
Waived or reduced deposits. Application fees, pet deposits, parking fees—all negotiable.
Flexible lease terms. Month-to-month options, early termination clauses, or subletting permissions give you optionality.
Upgraded units or amenities. Better unit, newer appliances, or parking spot at the same price.
The market has handed you leverage. The question is whether you’ll use it.
The Homebuying Market: The Most Confusing Signal Yet
This week’s data from the National Association of REALTORS tells a story that doesn’t make sense—until you understand what’s really happening.
Pending home sales fell 0.8% in January from the prior month and 0.4% year-over-year. Sales dropped in the Northeast and South, rose slightly in the Midwest and West. Overall, the trend is flat to declining.
But here’s what makes this so puzzling: affordability has improved dramatically.
NAR’s Housing Affordability Index hit 116.5 in January—the best reading since March 2022. That means the median household income is 116.5% of what’s necessary to qualify for the median-priced home under current interest rates.
Translation: Buying a home is more affordable now than it’s been in nearly three years.
And get this: According to NAR Chief Economist Dr. Lawrence Yun, an additional 5.5 million households now qualify for a mortgage at today’s rates compared to a year ago. That’s 5.5 million people who couldn’t get approved a year ago but can today.
Yun’s assessment? “Improving affordability conditions have yet to induce more buying activity. Most newly qualifying households do not act immediately, but based on past experience, about 10% could enter the market—potentially adding roughly 550,000 new homebuyers.”
Read that again: The door is open for 5.5 million more people. But they’re not walking through it yet.
Why?
Because people are waiting. Waiting for rates to drop to 4%. Waiting for prices to fall. Waiting for the “perfect” moment that feels safe and certain.
But here’s what they’re missing: The market they’re waiting for has already arrived.
Affordability is the best it’s been since March 2022. Mortgage rates are at a three-year low (more on this below). Competition is down—fewer buyers means less bidding war pressure, more negotiating power, and more time to find the right property.
The conditions that everyone was begging for in 2021 and 2022—when homes sold in 48 hours with 15 offers over asking—are here now. And people are sitting on the sidelines.
What This Means for You:
If you’ve been renting while saving for a down payment, or if you’ve been watching the market waiting for the “right time,” this is it.
Not because the market is perfect—it’s not. But because:
Affordability is improving for the 8th consecutive month
Competition is lower than it’s been in years
Rates are at a three-year low (see below)
Sellers are more willing to negotiate when fewer buyers are in the market
Inventory is slowly improving (up 3.4% year-over-year according to NAR)
The people who act now—while 5.5 million potential buyers are still sitting on their hands—will have the advantage. The people who wait for conditions to get “better” will likely find themselves competing with those 550,000 newly motivated buyers when they finally decide to move.
You don’t need the market to be perfect. You need it to be better. And it is.
The Investment Market: Why Institutions See What Consumers Don’t
While consumers hesitate, institutional investors are moving.
According to multiple industry reports released this month, multifamily investment activity is picking up heading into 2026. Marcus & Millichap reports that institutional and major funds expressed “heightened confidence” at the National Multifamily Housing Council conference, with many planning to increase transaction volumes compared to 2025.
Why? What are they seeing that individual homebuyers aren’t?
Michael Zaransky, managing principal of MZ Capital, put it plainly: “Lenders are hungry to put out debt on multifamily assets because they view it as a favored asset class.”
Let that phrase sink in: Lenders are hungry.
When was the last time you heard that about real estate lending? Not in 2023, when credit markets froze. Not in 2024, when lenders were cautious and selective. But now—in early 2026—capital is flowing back into multifamily.
Here’s what institutional investors are betting on:
Supply is finally contracting. Yardi Matrix projects that apartment completions will drop 24% in 2026 to 450,000 deliveries, down from 595,000 in 2025. That massive construction boom that caused vacancy rates to rise? It’s over. The pipeline is emptying.
Demand remains structural. With homebuying out of reach for many households earning under $100,000, more people are staying in the rental market longer than in previous cycles. Single-family rental households rose 1.7% in 2025, reaching a seven-year high according to Arbor Realty Trust and Chandan Economics.
Long-term fundamentals are strong. Despite current soft conditions, rental housing has the strongest long-term investment outlook among all commercial real estate property types according to the 2026 Emerging Trends in Real Estate report from Urban Land Institute and PwC. The only asset class rated higher is data centers.
Now, here’s the important part: Institutions aren’t being reckless. They’re underwriting conservatively. They’re targeting supply-constrained metros and secondary markets with limited new construction. They’re focusing on tenant retention and operational efficiency rather than betting on aggressive rent growth.
In other words, they’re moving strategically—not speculatively.
What This Means for You:
If you’re considering real estate investment—whether that’s buying a rental property, investing in a syndication, or building generational wealth through real estate—this is not a market where you can follow your gut or rely on aggressive projections.
This is a market where you need to:
Underwrite conservatively. Don’t assume 3-5% annual rent growth. Model 1-2% and make sure your deal still works.
Focus on cash flow, not appreciation. If you’re counting on property values increasing 20% in three years, you’re gambling.
Know your local market. National vacancy at 7.6% is meaningless if your submarket is at 12% or 5%. Dig into the specifics.
Be prepared for slower rent growth. Yardi Matrix forecasts 1.2% rent growth nationally for 2026, 2.0% for 2027. That’s the reality.
Understand that timing matters. Construction is slowing, which means supply pressure will ease—but that takes time. 2026-2027 will be about absorbing the excess inventory from 2023-2024.
And if you’re new to real estate investing? This is not the market to learn by doing. Get educated first. Understand underwriting. Know how to evaluate markets and properties. Talk to experienced investors.
The opportunity is real—institutional capital wouldn’t be moving if it wasn’t. But it requires discipline, not enthusiasm.
Mortgage Rates: They Dropped. Again.
Here’s the number that should end the “I’m waiting for rates to drop” conversation:
6.01%
That’s where the 30-year fixed mortgage rate landed as of February 19, 2026, according to Freddie Mac’s Primary Mortgage Market Survey.
Down from 6.09% last week. Down from 6.85% a year ago.
This is the lowest mortgage rate since September 2022.
And here’s what happened when rates dropped: Refinance application activity more than doubled over the past year, according to Freddie Mac. Homeowners who bought or refinanced when rates were 7%+ are now reducing their monthly payments by thousands of dollars annually.
But purchase application activity? It’s up compared to a year ago, but nowhere near what it could be given how many more people now qualify.
Let’s be clear about what this means:
The 3-4% mortgage rate environment of 2020-2021 was an anomaly. It was the result of emergency monetary policy in response to a global pandemic. The Federal Reserve has been explicit: they’re not going back to near-zero rates absent another catastrophic event.
The historical average for 30-year fixed mortgage rates over the past 50 years is around 7-8%. The rate you’re seeing now—6.01%—is historically reasonable. It’s not “high.” It’s normal.
And every month you wait costs you:
You’re paying rent instead of building equity. Every dollar you pay to a landlord is gone. Every dollar you pay toward a mortgage builds ownership.
Home prices don’t freeze while you wait. Even in “cooling” markets, prices stabilize and edge up in strong submarkets. NAR reported the median existing-home price was up 0.9% year-over-year in January. Waiting for rates to drop another percentage point while prices rise 5% is a net loss.
You can always refinance later. If rates do drop to 5% or below in the next few years, you can refinance. But if you wait to buy and prices continue rising, you’ve lost the opportunity to lock in today’s price.
Competition will increase. Remember those 5.5 million newly qualifying households? When they start moving, you’ll be competing with them.
What This Means for You:
If you can afford the monthly payment at 6.01%, buy now. Not because the market is perfect, but because:
This is as good as rates are likely to get in the near term
Affordability is the best it’s been in three years
Competition is lower than it’s been since 2019
The window for acting before 550,000+ newly qualified buyers enter the market is closing
Stop waiting for permission. The market is telling you it’s time to move.
The Strategic Takeaway: The Market Rewards Action, Not Patience
This week’s data tells a clear story, even if it feels contradictory on the surface.
The rental market has tipped decisively in favor of tenants. If you’re renting and not negotiating, you’re leaving money on the table.
The homebuying market is more affordable than it’s been in nearly three years. 5.5 million more households qualify at today’s rates than a year ago. But most aren’t acting yet, which means the informed buyer has an advantage.
Institutional investors are increasing multifamily transaction volumes. Lenders are hungry to deploy capital. The smart money sees opportunity where consumers see uncertainty.
And mortgage rates hit a three-year low. Refinance applications doubled. But many potential buyers are still waiting for conditions that have already arrived.
Here’s what I want you to understand: Markets that feel complicated, uncertain, or “not quite right” are exactly where opportunities exist.
When everything is obvious—when rates are at 3%, prices are soaring, and everyone is buying—that’s when you overpay and compete with 10 other offers. When the market feels messy and uncertain, that’s when most people freeze. And that’s when the informed move.
Right now:
Renters have negotiating power they haven’t had in years, and it’s not going away anytime soon.
Buyers have affordability and low competition, but most are still waiting for mythical “perfect” conditions.
Investors need to underwrite conservatively, but institutional capital is flowing because long-term fundamentals remain strong.
Mortgage rates are at a three-year low, but people are holding out for rates that may never materialize.
The market isn’t going to hand you perfect conditions. It’s handing you opportunity disguised as complexity.
The question is: Are you positioned to see it?
Sources:
Freddie Mac Primary Mortgage Market Survey, February 19, 2026
National Association of Realtors Pending Home Sales Report, February 19, 2026
Urban Land Institute and PwC, 2026 Emerging Trends in Real Estate
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