The Wait Is Over: Mortgage Rates Hit 6% (Finally), But What Does This Mean for Orange County Buyers and Sellers?
We just watched a client of ours lock a mortgage rate at 5.75% with zero points on their La Palma home purchase.
That's not a typo. 5.75%. No points.
After three years of rates bouncing between 6.5% and 8%, we're finally seeing what everyone's been waiting for: sustained rates at or below 6%. And for the first time since early 2023, this isn't a one-week blip before rates spike back up. Rates have held below 6.5% for 124 consecutive days as of early January 2026—the longest stretch since the Federal Reserve finished raising rates in July 2023.
Here's what's actually happening in Orange County right now, what it means if you're thinking about buying or selling this year, and why the next few months matter more than most people realize.
The Rate Drop Everyone's Been Talking About
The numbers tell a clear story. As of January 6, 2026, the 30-year fixed mortgage rate sits at 6.25% nationally, with local Orange County lenders offering rates as low as 5.875%. Compare that to where we were just 12 months ago—rates were hovering between 6.85% and 7.10% in January 2025.
That 70 to 85 basis point improvement (0.70% to 0.85% lower) changes the math entirely.
On a $900,000 loan with 20% down, the difference between a 7% rate and a 6% rate is $469 per month in principal and interest. That's $5,628 per year, or $168,840 in total interest saved over 30 years. A buyer with a $3,500 monthly budget can afford approximately $583,000 at 6% versus $579,000 at 7%—not a massive jump in purchasing power, but every bit counts in this market.
The bigger shift isn't just the rate itself. It's the stability. Rates have been trading in a narrow 6.0% to 6.3% band since mid-September 2025, with minimal week-to-week volatility. For the first time in years, buyers aren't watching rates swing wildly while they're in escrow.
What Orange County's Housing Economist Is Saying
Steven Thomas, Orange County's leading housing economist, released his latest Reports on Housing analysis on January 5, 2026. The data reveals something interesting: this year's start is the slowest start to a year since 2019, yet the lower mortgage rate environment and improved affordability has the ability to jumpstart demand.
Here's the Orange County market snapshot as of early January 2026:
- Active Inventory: 2,703 homes (down 14% in the past two weeks, but up 13% compared to January 2025)
- Buyer Demand: 951 pending sales in the past month (nearly identical to last year)
- Expected Market Time: 85 days (the highest start to January since 2020)
- Mortgage Rates: 6.19% as of January 5, the longest sustained period below 6.5% since 2023
The pattern is clear. Every January, the Orange County housing market starts frozen. Holiday hangovers, New Year's resolutions, and general distraction keep both buyers and sellers on the sidelines. Then, like clockwork, the market thaws. By the end of January, demand accelerates faster than supply, and competition heats up through mid-March.
This year follows that script, but with one critical difference: rates are cooperating. In 2023, rates dipped below 6.5% for only 36 days before spiking back above 7% by early March. In 2024 and 2025, rates stayed above 6.5% throughout the entire Winter and Spring Markets. This year, rates are positioned to remain between 6% and 6.5% during the prime buying and selling season—mid-January through early June—for the first time since the Federal Reserve finished raising rates.
The Orange County housing market remains rate-sensitive. When rates climb, demand slows. When rates fall, affordability improves, demand rises, and the market speeds up. A buyer looking at a $5,000 per month payment (principal and interest only with 20% down) can afford a $940,000 home at 7%. At 6.25%, that increases to $1,015,000. At 5.5%, it jumps to $1,101,250.
Lower rates unlock demand. And demand has been waiting.
Cypress and Northwest Orange County: Where Things Stand
Right here in Cypress, the market is showing its typical early-year slowdown, but the fundamentals remain strong. The median home price hovers around $1.03 million to $1.1 million, up 0.3% year-over-year. Properties are taking 45 to 57 days to sell on average, with homes receiving an average of 3 offers. Homes are selling 1% to 3% below list price, which reflects a more balanced market compared to the bidding war frenzy of recent years.
Across Northwest Orange County, the story varies by city and price point. In Huntington Beach, single-family home medians sit at $1.9 million, with condos averaging $915,000. Huntington Beach remains one of the strongest seller's markets in Orange County for properties under $2 million. In Buena Park, the median is more accessible, sitting about $100,000 below Cypress, while Los Alamitos commands a premium at $1.3 million—roughly $300,000 more than Cypress.
The interesting part isn't the price differences. It's where the activity is concentrated. Entry-level properties under $900,000 are still seeing multiple offers when priced correctly. The $1 million to $2 million range—where most Cypress, Anaheim, and Buena Park homes fall—offers more negotiating room than we've seen in years. Properties above $2 million are moving, but at a slower pace, with an Expected Market Time of 136 days for homes between $2 million and $2.5 million.
Steven Thomas's data shows that Cypress specifically is sitting at an Expected Market Time of 39 days. That's significantly faster than the Orange County average of 85 days, and it tells you something important: well-priced homes in Cypress are moving. The market isn't rewarding overpriced listings the way it used to. Price it right, present it well, and you'll see activity. Overprice it, and you'll watch it sit while buyers move on to the next option.
The 2026 Forecast: What Experts Are Predicting
Most housing economists project that mortgage rates will remain between 6% and 6.5% for the majority of 2026, with some possibility of approaching 5.8% by year-end if the Federal Reserve accelerates rate cuts.
The Fed cut rates by 0.25% in December 2025, bringing the federal funds rate to 3.5% to 3.75%. The market is pricing in two additional 25-basis-point cuts in 2026, likely in April and September. Goldman Sachs predicts cuts in March and June, with a terminal rate of 3.0% to 3.25%. Some Fed officials suggest even more aggressive cuts—100+ basis points—if the job market softens.
That's the key variable: the job market. If employment data remains weak and inflation doesn't spike unexpectedly, the Fed will have room to cut further. If the job market breaks or unemployment rises, the Fed will change its tune quickly, and mortgage rates could fall between 5.75% and 6%. That would trigger even more demand than we're seeing now.
For Orange County home prices, the forecast is modest but positive: +1% to +4% appreciation in 2026. Inventory remains historically low despite year-over-year increases. Entry-level properties under $900,000 will stay competitive. Properties between $1 million and $2 million—the core of the Cypress and Northwest Orange County market—will offer more negotiating leverage than they have in years.
Spring 2026 (March through May) is expected to be the optimal selling window. That's when demand typically peaks, and this year, with rates cooperating, demand has strong potential to rise substantially higher than 2025.
What This Means If You're a Buyer
Don't be fooled by the sluggish housing market at the start of the year. In January, inventory grows week over week, but buyer demand grows at a faster pace. There will be increased competition among buyers, especially in the entry-level price range. The market will continue to pick up steam from now through mid-March.
Very few sellers are desperate to sell, especially with the dawn of a new year and the anticipation of the Spring Market—the best time of year to sell. Unlike post-holiday retail shopping, this is not the time of year to search for a "deal."
If you've been waiting for rates to fall, they've fallen. If you've been waiting for the right time, this is it. The window between now and mid-March offers the best combination of rate environment and inventory selection we've seen since 2022. By April and May, competition will intensify as more buyers realize rates are stable and decide to move.
The key is preparation. Get a fully underwritten pre-approval before you start looking. Not just pre-qualified. Not just regularly pre-approved. Fully underwritten. Sellers and listing agents can tell the difference, and in a multiple offer situation, it matters tremendously.
Don't assume every listing is a deal just because inventory is up. Some homes have been sitting for a reason—price, condition, or poor marketing. A good buyer's agent will help you spot the difference between opportunity and a money pit.
What This Means If You're a Seller
Even if demand increases, it still boils down to proper pricing. Today's buyers are savvy and understand value. They scrutinize every photo and soak in all the details: bedrooms, bathrooms, square footage, condition, upgrades, location, lot size, amenities, year built, garages, storage, view. Yet price is the most critical factor. It's the differentiator between a buyer choosing to see the home in person or waiting for the next home to hit the market.
A realistic price will allow you to attract immediate interest. Overprice and waste valuable market time with far less activity before ultimately reducing. Sellers only get one shot at a first impression, so analyze every recent comparable pending and closed sale to properly arrive at an accurate price.
The market is punishing overpriced listings immediately. Properties that are priced 5% to 10% above market are sitting 60, 90, even 120 days before reducing. By then, buyers assume something is wrong with the property, even if nothing is.
If you're planning to sell this year, the Spring Market (March through May) offers the best opportunity. Demand will peak, rates are expected to remain favorable, and you'll have the largest pool of qualified buyers competing for well-presented homes.
The Bottom Line
Mortgage rates at 6%—and local lenders offering rates as low as 5.75%—represent the best financing environment Orange County has seen since early 2023. Rates have remained stable for over four months, and most experts expect them to stay in the 6% to 6.5% range throughout the Winter and Spring Markets.
This isn't a market crash. It's not a market boom. It's a rebalancing. And within that rebalancing are real opportunities for both buyers and sellers who understand what's actually happening.
For buyers: rates are cooperating, inventory is growing, and you have negotiating leverage you didn't have two years ago. But don't confuse "balanced" with "easy." Well-priced homes in desirable areas like Cypress, Anaheim, and Huntington Beach are still moving quickly.
For sellers: demand is improving, but pricing perfection is now non-negotiable. The market rewards accuracy and punishes overconfidence. Price it right from day one, present it well, and you'll see activity. Overprice it, and you'll watch buyers scroll past to the next listing.
The next few months matter. This is the window where rate stability meets seasonal demand acceleration. It's the moment people have been waiting for since rates spiked in 2022.
If you're thinking about buying or selling in Cypress, Anaheim, Buena Park, Los Alamitos, or anywhere in Northwest Orange County, reach out. We'd love to help you make the smartest decision for your family.
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