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US Housing Market Stabilization and Affordability Gains in 2026

US Housing Market Stabilization and Affordability Gains in 2026

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 The US housing market shows early signs of stabilization entering 2026, with falling mortgage rates at a 15-month low boosting hopes for first-time buyers and gradual affordability gains[1][5][6]. Over the past week, no major deals, partnerships, or product launches emerged, but market movements point to a potential rebound amid easing borrowing costs and rising inventory[1][2].

Mortgage rates, which hovered above 6 percent through late 2025, are trending downward from peaks near 7 percent, reducing the rate lock-in effect that kept existing homeowners sidelined[2][6]. Existing home sales rose modestly by about 2 percent year-over-year as of October 2025, yet remain over 20 percent below pre-pandemic levels of 5.4 million annualized[2]. New home sales proved resilient, with August 2025 figures up 15.4 percent year-over-year and a three-month average climbing to 713,000 units, projecting 800,000 annually[1]. Home prices grew below 1 percent year-over-year, a slowdown from prior years without national declines[2][5].

Consumer behavior is shifting positively: NerdWallet data indicates 17 percent of Americans now plan to buy within 12 months, up from 15 percent last year, signaling renewed momentum after years of cooling demand[3][4]. First-time buyer share hit a low of 24 percent in 2024 with median age at 38, but 75 percent of prospects are holding out for lower prices and rates, per the 2025 Bank of America report—down from prior highs but still dominant[1]. Affordability strains persist, with 93 percent calling costs unreasonable and a 40-year low income ratio; the US needs 4 million more homes[1].

Builders are responding with incentives like rate buydowns, appliance packages, and closing cost coverage to offload inventory amid debt pressures[1][2]. Compared to 2025's high-rate stagnation, this marks progress toward normalization, though structural hurdles like lock-in linger—no regulatory shifts or disruptions noted in the last 48 hours[2]. Redfin dubs 2026 the great housing reset[5].

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