What this means:

Mortgage rates have finally slipped below the psychological 6% threshold — a level we haven’t consistently seen since 2022. The average 30‑year fixed rate recently hit 5.99%, matching its lowest point in more than two years. This shift is already stirring movement among buyers and refinancers nationwide, and California’s market — long shaped by affordability pressures and rate sensitivity — is poised to feel the effects quickly.

Why Rates Dropped

A recent stock‑market selloff pushed investors toward bonds, driving Treasury yields down and pulling mortgage rates with them. Economists note that while today’s rates are still higher than the ultra‑low pandemic era, they’re meaningfully lower than the levels that slowed the market through 2023–2025. Marketplace

What This Means for California’s Housing Market

1. Buyer Activity Is Likely to Increase

California has spent much of the past two years battling sluggish sales due to elevated rates and economic uncertainty. Statewide home sales have repeatedly trailed year‑ago levels, with the California Association of REALTORS® reporting multiple months of year‑over‑year declines. A sub‑6% rate could finally pull sidelined buyers back into the market — especially those who have been waiting for affordability to improve even slightly.

2. Monthly Payments Become More Manageable

Even a small rate drop can meaningfully change long‑term affordability. A decline from 6.34% to 6% saves borrowers nearly $30,000 over 30 years on a median‑priced home loan, according to Realtor.com’s analysis. For California buyers facing some of the highest home prices in the nation, this relief matters.

3. Move‑Up Sellers May Re‑Enter the Market

California has been stuck in a “rate‑lock” environment — homeowners unwilling to trade their 3–4% mortgages for something higher. With rates dipping below 6%, more move‑up sellers may finally consider listing, helping ease the state’s chronic inventory shortage.

4. Refinancing Activity Will Surge First

Refinance applications are already up more than 130% compared to last year. While this doesn’t directly increase home sales, it signals renewed consumer confidence — often a precursor to stronger purchase activity.

5. Spring and Summer 2026 Could Heat Up

Economists expect lower rates to pull more buyers into the market ahead of the spring buying season. If inventory rises even modestly, California could see a more balanced — and more active — market than the past two years.

Bottom Line

Mortgage rates dipping below 6% is more than a headline — it’s a meaningful shift that could reshape California’s housing landscape in 2026. Expect increased buyer interest, improved affordability, and a potential uptick in listings as homeowners regain confidence. While prices may not fall dramatically, activity is likely to rise, giving both buyers and sellers more room to move.