US Housing Market Heads for Stabilization in 2026
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US Housing Market Heads for Stabilization in 2026
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The US housing market is displaying clear signs of stabilization as we close out 2025, with December data revealing a market that diverges sharply from typical year-end slowdowns. According to the latest Mortgage Bankers Association data, purchase applications have climbed consistently throughout 2025 compared to 2024, indicating that buyer demand is returning earlier than historical patterns would suggest.
Inventory recovery continues to be a defining feature of the current market. National single-family inventory has risen 15.68 percent year over year, marking the third consecutive year of inventory gains. This represents a significant shift from the ultra-tight supply conditions that dominated recent years. Realtor.com forecasts that active listings will rise 8.9 percent in 2026, though the recovery is slowing as markets approach more normalized levels.
Mortgage rates have stabilized in a more predictable range after years of volatility. The national average 30-year fixed mortgage rate currently sits around 6.2 to 6.3 percent, with 15-year fixed rates hovering near 5.5 to 5.6 percent. Bankrate's latest lender survey shows 30-year rates at 6.28 percent, representing some of the year's lowest levels. Treasury yields, which heavily influence mortgage rates, have begun cooling and drifting downward since late 2025, suggesting potential further rate relief ahead.
Pending home sales reached 333,635 homes in contract, exceeding activity levels seen in both 2022 and 2023. This signals that demand is rebuilding beneath the surface despite elevated prices and interest rates. However, existing-home sales remain historically low, projected to rise only 1.7 percent to 4.13 million in 2026, still near multi-decade lows typically associated with affordability challenges.
Home prices are expected to rise 2.2 percent in 2026 after a 2.0 percent gain in 2025. Yet because inflation is projected to rise faster, real home prices are effectively declining. About half of active listings in some markets like Phoenix have experienced price reductions, reflecting more cautious seller expectations.
The consensus from market analysts is that the housing sector remains in transition. With stabilizing rates, improving inventory, and reawakening demand, 2026 appears positioned for a potential resurgence. Market participants describe current conditions as balanced and slightly buyer-leaning, creating what many characterize as a strategic window for purchase activity before spring competition intensifies.
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