A short dip brought new momentum to buyers and sellers across the Ocean State’s competitive housing market
Mortgage rates briefly moved below 6 percent earlier this month, the first time they have crossed that threshold in several years. The decline was short-lived, but noticeable, particularly among buyers and homeowners who have been closely tracking affordability.
Rates quickly moved back above 6 percent, leaving overall borrowing costs largely unchanged from where they started the week. While the move did not represent a fundamental shift in the mortgage market, it did provide insight into how sensitive buyer behavior remains to even modest rate changes.
What caused the dip
The short-term decline followed a policy announcement signaling increased federal involvement in the mortgage bond market. Financial markets reacted quickly, and mortgage pricing adjusted in response.
However, the underlying economic conditions that typically drive sustained rate movements — inflation trends, labor market data, and long-term bond yields — did not materially change during this period. As a result, most economists and lenders view the dip as temporary rather than the beginning of a new downward trend.
Why rates alone don’t explain Rhode Island’s market
In Rhode Island, mortgage rates are only one part of the affordability equation. Housing supply remains the more significant constraint.
Inventory across much of the state continues to sit well below levels considered balanced. While the number of active listings has improved slightly compared to recent lows, supply has not increased enough to meaningfully offset demand, particularly in Providence, the East Bay, and coastal communities.
As Tyler Cote, broker and owner of Cote Partners Realty, explains:
“Rates influence monthly payments, but inventory drives outcomes. When supply is limited, even a small dip in rates tends to increase competition rather than reduce prices.”
This dynamic helps explain why Rhode Island home prices have remained relatively stable despite higher borrowing costs and slower sales volume nationally.
Implications for buyers
For buyers, the brief move below 6 percent does not materially change long-term affordability. It does, however, reinforce the importance of preparation. In a low-inventory market, buyers who are well-qualified, decisive, and informed about local pricing trends continue to have an advantage over those waiting for broader market shifts.
Rather than attempting to time interest rates, buyers are often better served by focusing on neighborhood-level conditions, realistic price expectations, and financing options that allow flexibility if rates move again.
Implications for sellers
For sellers, conditions remain favorable but more selective than during the peak of the low-rate era. Buyers are more sensitive to pricing and value, and listings that are misaligned with current market conditions are taking longer to attract offers.
Accurate pricing, strong presentation, and clear positioning are increasingly important as buyers compare options more carefully.
Bottom line
The brief dip below 6 percent was notable, but it did not change the fundamentals of the Rhode Island housing market. Limited inventory continues to shape pricing and competition, while interest rates remain elevated compared to pre-2022 levels.
Short-term rate movements may influence activity at the margins, but local supply and demand conditions continue to be the primary drivers of outcomes.
