Until the Iran war sent mortgage rates rising, interest rates had been falling and inventory had been inching upwards in Massachusetts – ingredients needed for a busy spring market. iStock illustration

Spring is here. And the Massachusetts housing market is starting to wake up after a long, chilly stretch. With mortgage rates stabilizing over the winter and inventory showing signs of life, spring 2026 could mark a turning point after years of stagnation.

The market isn’t returning to the frenzy of the early 2020s. But there is cautious optimism for a more balanced landscape.

Drawing from recent data and forecasts, here are some thoughts from myself and my peers at the Massachusetts Mortgage Bankers Association (MMBA) on what to expect.

 The Good: The ‘Rate-Locked’ Test the Waters

A few things are giving buyers, sellers, lenders and real estate agents reason to stay optimistic this spring.

Spring is traditionally the peak homebuying season in Massachusetts, with warmer weather, families timing moves around school years and more listings coming online.

This winter’s stabilizing and potentially declining mortgage rates might drive increased activity as “rate-locked” sellers test the water and buyers feel less squeezed. The Iran war has sent mortgage rates up, but there’s still time for interest rates to dip before spring is over if the conflict dies down.

Some industry experts believe rates below 6 percent will be enough to cause buyers to rush in and take advantage of lower borrowing costs. Homeowners with sub-4 percent rates were starting to test the waters as rates stabilized this winter.

This is particularly significant in Massachusetts where homeownership tenure averages 13.3 years, one of the longest in the U.S., due to the “rate-lock” effect where owners with low pre-2022 mortgage rates avoid selling because of today’s higher rates, exacerbating inventory shortages.

A modest improvement in housing inventory is also encouraging.

Recent data shows there are 10,600 active listings statewide. That’s roughly meaning 6 percent more homes for sale than at the same time last year. This gives buyers more choices and a bit more leverage, reducing the extremely cutthroat competition that stalled deals in prior years.

“The rate-lock effect is real, but equity accumulation has already quietly built the case for selling regardless,” my friend Joe Smith, a Realtor who’s been showing homes in the South Coast area, told me. “Years of price appreciation have put a lot of homeowners in a position where selling makes financial sense even at today’s rates. As rates continue to pull back from their peak, more of those owners are willing to find out what the market will actually pay. That’s driving up inventory and giving buyers a sense of hope that a less competitive market is coming.”

MassHousing also just launched a helpful new accessory dwelling unit (ADU) loan program: low-cost second mortgages up to $250,000 for building detached ADUs (or $150,000 loans for attached units) for lower- and moderate-income owners.

It’s a smart way to add more living space without building from scratch. Over 1,200 ADUs were approved in the first year after the Affordable Homes Act legalized them statewide. This new offering from MassHousing could supercharge that trend. The result may be niche lending opportunities  – and more housing overall.

Image courtesy of Freddie Mac

The Bad: Lack of Supply and Low Affordability

Even with reasons to be positive, Massachusetts has deep and long-standing problems with housing supply and affordability that will not be easy to overcome.

Only about 63 percent of Massachusetts households own their home, well below the national average. That means almost 4 in 10 are renting – often because high prices, taxes and rates make buying feel out of reach, especially for first-timers or young families.

We still need way more homes – experts say hundreds of thousands more just to catch up. But building hasn’t kept pace: Permits dropped sharply in recent years, like a party where too many people show up but there aren’t enough chairs.

Home prices have jumped 73 percent since 2000 as a result, while incomes (adjusted for inflation) barely budged 4 percent. The typical single-family home now costs around $640,000 statewide (up from last year).

To afford it comfortably, a household needs about $160,000 or more in income – double what many young families make.

Ben Giumarra

The Ugly: Lingering Uncertainty

The wildcard? Interest rates. Forecasts mostly see them hanging around 6 percent, but if the effect of the Iran war, renewed inflation fears or other surprises push them up, monthly payments could stay painful and slow everything down again. It’s this uncertainty that keeps people on edge.

Spring 2026 has the ingredients for a more balanced, active season in Massachusetts. Inventory’s improving, and programs like MassHousing’s ADU loans are real steps forward.

Still, record unaffordability and limited supply mean the path forward is not easy for everyone. Consumers will benefit greatly from working with experienced real estate and mortgage professionals.

At the MMBA, we’re rooting for a market that works better for everyone. With some smart planning, this spring could open real doors. While you’re doing that, we’ll keep advocating for policy and market changes that expand access to housing across the commonwealth.

Ben Giumarra is the 2026 chair of the Massachusetts Mortgage Bankers Association and the general counsel and chief compliance officer at Embrace Home Loans.