US Housing Market in 2026: Shifting Dynamics and Uneven Recovery
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US Housing Market in 2026: Shifting Dynamics and Uneven Recovery
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About this listen
The US housing market is entering 2026 with mixed signals as price pressures ease while inventory remains constrained in many regions. Year-over-year home prices grew just 0.1 percent between December 2024 and December 2025, marking a significant deceleration from 2.6 percent growth a year earlier. This slowdown reflects a critical shift in market dynamics across the nation's 300 largest housing markets.
Currently, 106 major metro areas, representing 35 percent of the largest markets, are experiencing year-over-year price declines. This count has stabilized over the past seven months after climbing sharply in the first half of 2025. Meanwhile, 194 markets continue posting annual gains, demonstrating the uneven nature of the current housing landscape. The Sun Belt has emerged as the weakest region, particularly in the Gulf Coast and Mountain West, where pandemic-era price surges far outpaced local income growth. Markets like Tampa and Austin are facing particular challenges as buyer leverage has increased substantially.
Inventory conditions are providing relief to homebuyers. Active inventory rose 9.5 percent year-over-year as of mid-January, while median list prices fell 0.3 percent on a year-over-year basis, with prices per square foot declining 1.8 percent. New listings increased 4.2 percent, signaling that sellers are gradually re-entering the market despite modest buyer activity. Homes are spending six days longer on the market compared to the prior year, reflecting slower sales velocity.
Affordability has improved modestly. Median monthly housing payments have dipped to 2,413 dollars, down 5.5 percent from a year earlier. Mortgage rates have ticked lower, settling near 6 percent, providing some relief after remaining stubbornly high throughout 2025.
Looking ahead, Zillow economists forecast 1.2 percent home value growth in 2026 with existing home sales climbing 4.3 percent to 4.26 million units. However, new construction starts are expected to hit their weakest level since 2019, as builders contend with excess inventory and rely heavily on affordability incentives to maintain sales velocity. The market is settling into what economists describe as a healthier equilibrium, though conditions remain far from robust.
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This content was created in partnership and with the help of Artificial Intelligence AI
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