Cautious Optimism in US Housing Market as Conditions Stabilize in 2026
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Cautious Optimism in US Housing Market as Conditions Stabilize in 2026
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About this listen
The US housing market is demonstrating cautious optimism as we move into 2026, with the National Association of Realtors reporting a 5.1 percent month-over-month increase in existing-home sales for December, reaching a seasonally adjusted annual rate of 4.35 million units. This marks the strongest performance in nearly three years according to NAR Chief Economist Lawrence Yun. The median existing-home price stands at 405,400 dollars, representing the 30th consecutive month of year-over-year price increases, though growth has slowed to just 0.4 percent annually.
Mortgage rates have become a key driver of momentum, with 30-year fixed rates declining to 6.19 percent in December, down from 6.72 percent one year ago. This week, rates dipped further to 6.18 percent, marking the lowest level since 2022 according to Bankrate data.
The inventory situation is showing meaningful improvement. Total housing inventory reached 1.18 million units in December, representing 3.3 months of supply, though this remains below historical norms. Industry leaders attribute this recovery not to new construction but to homes staying on the market longer as buyers take more cautious approaches to purchasing decisions.
Regional variations reflect broader market dynamics. The South led growth with a 6.9 percent month-over-month increase in sales, while the Northeast saw more modest gains at 2 percent. Price movements varied by region, with the South experiencing a slight 0.3 percent year-over-year decline while the Northeast saw prices climb 3.7 percent.
Despite these improvements, challenges persist. A Bright MLS consumer survey found that over 80 percent of renters express concern about cutting essential spending, indicating widespread economic anxiety. Industry analysts predict 2026 will bring cautious progress rather than a full rebound, as pent-up demand from buyers waiting for rate relief combines with lingering affordability concerns.
Single-family home sales increased 1.8 percent year-over-year, while condominium sales declined 2.4 percent over the same period. The stabilization in prices combined with increased inventory is creating a more balanced market environment that analysts describe as favorable for strategic buyers and sellers willing to negotiate thoughtfully rather than engage in bidding wars characteristic of recent years.
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