Market Update · August 12, 2026 · 7 min read
Mortgage applications climbed 3.6% last week, according to the Mortgage Bankers Association. That's the good news. The 30-year fixed rate dropped to 6.77% from 6.91% the week before, and people responded. Refinance share jumped to 40.7%.
But here's the thing. Applications going up doesn't mean homes are actually selling. In fact, Redfin reported that home sales dropped to their lowest level in nearly two years in July. Near-record prices and elevated mortgage rates — even when they dip a bit — are keeping a lot of would-be buyers on the sidelines. Texas and Seattle led the decline, but we're feeling it here in the Baltimore-Washington corridor too.
I've been holding open houses in Harford and Baltimore Counties for the past three weekends. Traffic is okay. Not terrible, but not spring 2021 either. The buyers who show up are serious, but they're also hesitant. They like what they see, then they go home and run the numbers again. At 6.77%, a $400,000 mortgage costs about $2,600 a month in principal and interest alone. That's before taxes, insurance, and HOA fees. It adds up fast.
This morning we got July's Consumer Price Index data. Realtor.com reported that inflation eased to 3.4%, which is a positive sign for mortgage rates. The numbers came in exactly as expected — no surprises either way. That's actually good. Markets hate surprises.
The Federal Reserve has been wrestling with whether to hike rates again or hold steady. Three policymakers pushed for a hike at the last meeting, but the committee held. Now, with inflation ticking down and two months of weak jobs data, the pressure to hike is easing.
Freddie Mac's most recent survey (August 6) shows the 30-year fixed rate at 6.69%, with the 15-year at 6.01%. That's still elevated compared to where we were for most of the past decade, but it's a tick down from where we sat in mid-July.
If you're shopping for homes in Anne Arundel County or Prince George's County right now, even a quarter-point drop in your rate translates to real monthly savings. On that same $400,000 loan, the difference between 6.77% and 6.50% is about $65 a month. Over thirty years, that's more than $23,000. It matters.
Here's where it gets interesting for first-time buyers in Maryland and DC. Zillow found that starter homes are piling up while luxury homes fly off the market. Inventory in the entry-level tier is rising. Price cuts are more common. Competition is easing.
That tracks with what I'm seeing in Baltimore City, Harford County, and parts of Howard County. Homes under $350,000 are sitting longer than they did six months ago. Sellers are adjusting their expectations. I had a listing in Bel Air priced at $329,900 sit for three weeks before we got an offer. A year ago it would've gone in a weekend.
On the other hand, homes over $600,000 — especially move-in-ready properties in good school districts — are still moving. I showed a house in Fallston last month that had four offers within five days, all over asking. The buyer pool shrinks as you go up in price, but the buyers who can afford those homes have weathered the rate environment just fine.
Realtor.com analyzed the ongoing divide between the top and bottom of the market. Treasury Secretary Bessent says the K-shaped economy is over, but housing data tells a different story. If you've got equity and income, you're fine. If you're stretching to buy your first home in Montgomery County or York County, PA, you're feeling every basis point of that mortgage rate.
Sellers, listen up. The market hasn't crashed. Prices are still up year-over-year in Maryland according to the data I shared earlier this week. But the frenzy is over. You're not going to get ten offers in two days unless your home checks every box and you price it right.
If you're selling a starter home — something in Baltimore County, Cecil County, or southern PA under $375,000 — you need to be aggressive with prep and realistic with pricing. I just wrote a no-nonsense prep guide for Prince George's County sellers that applies across the board. Fresh paint, clean carpets, and a price that reflects current inventory will get you sold. Wishful thinking and deferred maintenance will get you 60 days on market and a price cut.
Mid-tier homes ($400,000–$600,000) are moving at a steady pace if they're clean and fairly priced. Luxury properties are still competitive, but you're fishing in a smaller pond.
That 40.7% refinance share in the MBA data is notable. When refis make up that much of the application volume, it usually means rates have dropped enough that people who bought or refinanced in the past year or two are looking to save money.
But here's the reality: most homeowners in Maryland, DC, Pennsylvania, and Delaware who own their homes have rates below 5%. They locked in during the pandemic years or before. For them, 6.77% is still a terrible deal. The refi wave we're seeing now is mostly people who bought in late 2023 or 2024 when rates were even higher — mid-7s or low-8s on some jumbo loans — finally getting a chance to trim a half-point or more.
If you bought a home in Harford County at 7.2% last fall, dropping to 6.7% today saves you real money. It's worth a call to your lender. If you're sitting on a 4.5% rate from 2021, stay put.
Redfin's deep dive into July's sales slump pointed to a few culprits: near-record prices, elevated mortgage rates, and economic instability. Tech layoffs hit Seattle hard. Texas has been dealing with oil sector volatility and, frankly, a massive influx of inventory that finally caught up with demand.
Here in the mid-Atlantic, we don't have one dramatic story. We have a slow grind. Prices are high. Rates are tolerable but not exciting. Inventory has improved — I talked about that yesterday — but buyers are cautious. The July slowdown was predictable. August isn't going to be gangbusters either.
But that doesn't mean it's a bad time to buy or sell. It just means you need to be smart. Price your home right if you're selling. Get pre-approved and move quickly on the right property if you're buying. The days of "throw spaghetti at the wall and see what sticks" pricing are gone.
Not every market is dragging. Zillow noted that while newly pending sales fell sharply from June, some places are bucking the trend. I'm seeing pockets of strength in parts of Howard County and Anne Arundel County where new employers are bringing in workers. Downtown Baltimore is seeing more investor interest in condos as remote work settles into a hybrid pattern and people want a city pied-à-terre again.
Delaware — New Castle County especially — continues to attract retirees and remote workers looking for lower property taxes and a slightly slower pace. I closed on a sale in Newark last month where the buyers relocated from northern Virginia specifically for the tax savings.
If you're a buyer, this is a good moment. Rates dipped just enough to improve your buying power. Inventory is better than it's been in two years. Sellers are more willing to negotiate than they were last spring. You're not going to get 3% mortgage rates, but you're also not competing with fifteen other offers on every halfway-decent house in Harford County.
If you're a first-time buyer in Maryland, I'd encourage you to read what I tell every first-time buyer before we tour a single house. Getting pre-approved, understanding the new buyer agency rules, and knowing your actual budget (not what the bank says you can borrow, but what you can comfortably afford) will save you heartache.
If you're selling, don't panic, but don't get greedy either. The market is functioning. Homes are selling. But only the good ones at the right price. Everything else just sits.
Mortgage applications going up 3.6% in one week doesn't reverse months of cautious buyer behavior. But it does show that buyers are still out there, still watching rates, still ready to move when the numbers make sense.
We're in a "show me" market. Buyers want value. Sellers want certainty. Both are possible, but neither is guaranteed. If you're thinking about buying or selling a home in Maryland, DC, Pennsylvania, or Delaware and want to talk through your specific situation, let's chat. I promise I won't sugarcoat it.
The housing market isn't broken. It's just less forgiving than it used to be.
Katrina Kirton Sherrod, REALTOR® · Samson Properties · Licensed in MD, DC, PA & DE · 443-616-9770 · Katrina@kkstherealtor.com
“The best time to buy a home was five years ago. The second best time is after we talk.” — Every honest realtor, eventually