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US Housing Market Stabilizing: Trends, Projections, and a Path to Balanced Growth

US Housing Market Stabilizing: Trends, Projections, and a Path to Balanced Growth

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 Over the past 48 hours the US housing industry has shown early signs of stabilization after several turbulent years. Mortgage rates have been trending down through 2025 and are now hovering near 6 percent. This is substantially lower than the 7 to 8 percent range seen last year which had locked many buyers out of the market. Improved affordability is bringing some buyers back but national turnover remains one of the lowest in decades with only 2.8 percent of US homes sold so far this year. The main reasons are still elevated prices and the fact that most homeowners have low fixed mortgage rates making them unwilling to sell unless necessary.

Despite these headwinds, inventory is slowly loosening as more owners with rates above 6 percent decide to list due to life reasons like job changes and family needs. National housing inventory has increased every month in 2025. As a result, homes are spending more time on the market, there are more price reductions, and bidding wars have cooled significantly. Year-over-year home prices are basically flat nationally, but trends vary widely depending on location. Some markets like Illinois, New York, and New Jersey have seen price increases up to about 7 percent, while states like Florida are experiencing declines up to 2.3 percent.

According to the FHFA, US house prices rose 2.2 percent between the third quarter of 2024 and the third quarter of 2025, and rose just 0.2 percent compared to the previous quarter. Analysts including Fannie Mae and the National Association of REALTORS expect mild appreciation for 2026 in the 1 to 4 percent range. Existing-home sales have ticked up 1.2 percent in October, with modest growth in the Midwest and South.

Major industry players are focusing on normalization—offering incentives like rate buydowns, and expanding new build options. Zillow recently revised its outlook and projects slightly negative or flat home price growth for 2026, emphasizing the market's local splits.

Overall, the temporary freeze brought on by rate hikes has given way to a healthier, more balanced market characterized by improved affordability, greater inventory, and less frantic transactions. While housing burdens remain high in some coastal cities, the broader market is showing cautious optimism for measured growth heading into 2026.

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This content was created in partnership and with the help of Artificial Intelligence AI
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