Lower Interest Rates & the Real Estate Market: What Tri-Cities Buyers Should Know

As we close out 2025, there’s a mix of optimism and realism in the housing market — especially for homebuyers in the Tri-Cities (Johnson City, Kingsport, Bristol) region. After a year of elevated borrowing costs, interest rates have drifted lower, opening the door for buyers who may have felt priced out earlier in the year. But what does that really mean for you if you’re considering buying a home right now or in early 2026? Let’s break it down.

Interest Rates: Lower Than Earlier This Year (But Still Above Historical Lows)

One of the biggest market stories right now is mortgage rates easing from the extremely high levels of recent years. According to Federal Reserve mortgage rate data, the average 30-year fixed mortgage rate has settled into the low-6% range, offering buyers improved affordability compared to earlier in the year.

As of mid-December:

• The 30-year fixed mortgage rate is averaging about 6.21% — near the lowest level of 2025. 

• That’s down from last year when rates hovered around the high 6s to 7s, impacting affordability for many buyers.

While these rates are still above the record lows we saw in the early pandemic years (when rates dropped into the 2–3% range), this downward movement is meaningful for monthly payment calculations and buying power.

What Lower Rates Mean for Tri-Cities Buyers

Recent analysis from LendingTree’s mortgage rate forecast shows that today’s lower rates can reduce monthly payments by hundreds of dollars compared to rates seen earlier in 2025. For buyers in the Tri-Cities, this can mean qualifying for a higher price point or keeping monthly expenses more comfortable. Even modest drops in interest rates can significantly impact monthly payments and overall affordability:

• A rate around 6.2% versus 6.8–7% can shave hundreds off monthly mortgage payments on a typical home, making now a more attractive time to step into the market than earlier in 2025. 

• Rates that stay near these levels — or slowly drift lower into 2026 — could improve purchasing power, especially if home prices hold steady or increase only modestly.

Housing Market Conditions — Local & National

Nationally, lower interest rates have helped stabilize buyer demand while gradually increasing inventory in many markets. According to recent housing market coverage from the Associated Press, easing rates combined with steady job growth have encouraged more buyers to re-enter the market, even as affordability remains top-of-mind. These trends often ripple down to regional markets like Northeast Tennessee.

In the broader U.S. market:

• Lower mortgage rates and increased inventory have helped balance buyer interest after a slower season. 

• Some forecasts suggest rates could continue trending down slightly through 2026, potentially averaging in the mid-5% range for 30-year mortgages — if long-term projections hold. 

That means mortgage rates could become even more favorable in early 2026, but don’t expect dramatic drops all at once.

Locally, the Tri-Cities market has remained active through 2025 despite higher overall borrowing costs earlier in the year. Inventory has been tighter than many buyers would like — a trend common in much of Tennessee — but buyer demand persists, and recent rate easing could help move more buyers off the sidelines. 

Strategies for Tri-Cities Buyers Right Now

If you’re thinking about buying in the next few months, here are practical steps to put you in a strong position:

Get pre-qualified now — lenders can lock in competitive rates for qualified buyers.

Shop around with multiple lenders — small rate differences add up over time.

Consider timing — seasonal market shifts (like winter slowdown) sometimes offer negotiating leverage.

Look at long-term affordability — even with lower rates, factor in property taxes, insurance, and maintenance when determining your budget.

Final Takeaways for 2025

Lower mortgage rates compared with earlier this year are a positive sign for housing affordability — especially for Tri-Cities buyers who may have been waiting for the right moment. While rates remain above historical lows, the downward trend into the low-6% range makes homeownership more attainable now than a few months ago. If you’re ready to buy, this winter and early 2026 could be an excellent time to make your move — with proper planning and guidance.

* Information for this BLOG came from the following sources;  AP News, S&P Global, Freddie Mac, Lending Tree, and North East Association of Realtors.