Homeowners are trapped by low rates while new buyers face $2,005 monthly payments

New homebuyers now face significantly higher entry costs due to elevated mortgage payments. The average outstanding U.S. mortgage payment reached $2,005 in the fourth quarter of 2025, a 44% increase from $1,390 in early 2021 — a rise of more than $600 over four years. That figure represents the entire portfolio of existing mortgages, meaning new borrowers entering the market today face even higher average payments than this baseline implies.

Just over half of all outstanding mortgages carry interest rates of 4% or lower as of Q4 2025. Roughly 78% have rates below 6%. Homeowners with these low rates are choosing not to sell, avoiding replacement loans at higher rates. This creates a 'lock-in' effect that restricts housing supply.

The share of mortgages aged five to seven years rose from 11.8% in Q4 2023 to 38.4% in Q4 2025. The share of mortgages less than four years old fell from 59.2% to 32.1% over the same period. The real estate market remains structurally constrained, with limited resale inventory available for prospective buyers.

Pending home sales rose 3.9% year over year in March 2026 despite higher rates. Active listings increased 8.1% annually but remain 13.8% below pre-pandemic 2017–19 levels. New-construction inventory remains above pre-pandemic norms as builders offer rate buydowns to attract buyers.