US mortgage rates this year have sunk to their lowest level in more than three years and could unlock more consumer demand in a housing sector that has faced falling affordability.
But tepid early-year housing demand has left polyvinyl chloride (PVC) suppliers cautiously optimistic that demand in the housing market could strengthen compared with 2025, with most expectations centered around a repeat of last year.
About 51pc of outstanding mortgages have interest rates below 4pc, according to third quarter 2025 data from the US Federal Housing Finance Agency. With current rates as much as 50pc higher, that means more current homeowners who would otherwise be in the market for a new home are staying put.
Realtors and mortgage experts anticipate a nominal rebound in housing demand this year as average rates on a 30-year mortgage slumped below 6pc for the week ended 27 February — the first time in more than three years — before crawling back to an average 6pc this week, Freddie Mac data show.
"Rates below 6pc are an important psychological milestone for both buyers and sellers," said Nadia Evangelou, senior economist and director of real estate research at the National Association of Realtors (NAR). "Nearly 5.5mn additional households can afford the median-priced home when rates fall from 7pc to 6pc."
Housing affordability improved early this year on higher income and declining interest rates. Gradually higher purchasing power early this year underpins expectations of an 8pc increase in 2026 home sales and indicates an anemic US housing sector could be at an inflection point, data from the Mortgage Bankers Association (MBA) show.
But new-home construction remains subdued, and a marginal decrease from 2025 is still expected. The MBA forecasts a 2pc decline this year in total housing starts from 2025, while the NAR projects a 1pc increase in single-family starts.
Bullish demand signals in the domestic housing market have not shifted outlooks from PVC suppliers, who are maintaining tempered demand expectations from home construction. Current outlooks largely anticipate PVC demand into new-home construction to mirror 2025, which extended the multi-year demand slump in the sector. Instead, PVC suppliers are increasingly bullish on rebounding demand in the remodeling and wiring and cable industries, sources said. Residential remodeling activity is expected to grow by 3pc in 2026 and by 2pc in 2027, data from the National Association of Home Builders show. This trend is supported by an aging housing stock, homeowners locked into lower mortgage rates, and older homeowners not purchasing new homes.
US home builders share the PVC industry's cautious outlook. A survey of home builders in February continued to paint a cooling new-home market, data from the NAHB/Wells Fargo Housing Market Index show. The leading concerns for surveyed builders are buyers waiting for lower mortgage rates, concerns about the broader economic environment, and high Federal Reserve interest rates.
The US Federal Reserve is generally not expected to reduce its target interest rate in the first half of the year, with expectations of rate cuts in 2026 significantly dampened by stubbornly-high inflation and weaker-than-expected employment numbers in recent months, CME FedWatch data show.
