A Look At The Current Real Estate Market (Winter 2025)

Current market conditions

Home sales expected to rise as market gains momentum

Sales of previously owned homes hit 4.06 million in 2025, staying roughly the same as in 2024, the lowest level since 1995, the National Association of Realtors (NAR) reported. In fact, when looking at the exact numbers, sales were slightly lower than the year before.

Overall, existing home sales have been declining each year since 2022, driven by rising mortgage rates, years of rapidly increasing home prices, and a long-standing shortage of homes caused by over a decade of below-average construction, leaving many potential buyers priced out of the market.

However, December 2025 capped the year with a strong finish, as sales of previously owned homes climbed to a seasonally adjusted annual rate of 4.35 million, up 5.1% from November. This gain exceeded analysts’ expectations of a 2% increase and was 1.4% higher than a year earlier.

After adjusting for seasonal factors, December marked the strongest monthly sales pace in nearly three years. Month-over-month sales rose across all regions, while year-over-year gains were seen in the Northeast and Midwest, even as sales declined in the South and West. The NAR forecasts a 14% increase in home sales nationwide in 2026.

What this means for buyers and sellers: After a slow few years, December 2025’s strong finish and the NAR’s forecast of sales jump suggest the housing market could pick up in 2026. Buyers might have more options as inventory eases a bit, though high prices will still be a challenge in some areas. Sellers could see more interest and faster sales, but they’ll still need to price their homes strategically to attract buyers.

Inventory increases, but affordability remains a challenge

December 2025 marked the 26th consecutive month of higher inventory compared with the same month a year earlier, up 12.1% year over year. However, inventory fell 8.9% from November due to normal seasonal patterns and remains well below pre-pandemic levels nationwide.

Top real estate agents nationwide expect more sellers to enter the market in 2026, encouraged by relatively favorable interest rates and pent-up frustration from paying rent or delaying life plans, with 68% predicting an increase in housing inventory.

However, despite this potential boost, the NAR notes that a structural housing shortage remains, as there simply aren’t enough homes for the size of the population, keeping affordability constrained.

Home price growth eases, as the market steadies

Home price growth remained slow at under 1% annually for the fifth straight month in December 2025, with month-to-month prices essentially unchanged at -0.2%. Overall, the market ended the year nearly flat, reflecting a more balanced national housing market. This slower growth has helped improve affordability, as household incomes continue to rise faster than home prices.

Looking ahead to 2026, home prices are expected to increase modestly by 2% to 3%, roughly in line with inflation, while wages are projected to grow faster. This suggests buyers may gain some additional purchasing power, and homeowners can enjoy price stability, with even small gains providing a positive boost.

According to agents surveyed by HomeLight, even with more homes expected on the market next year, prices are still projected to rise in 2026. Around 41% of agents expect those increases to stay under 5%.

What this means for buyers and sellers: For buyers in 2026, slower price growth could make it a little easier to get ahead, especially as paychecks rise and affordability improves. Sellers may not see big price spikes, but steady demand and modest gains should still keep home values in a good place. All in all, the market looks more balanced, giving buyers some breathing room while sellers continue to see solid interest.

Economic indicators affecting the 2026 real estate market

The housing market doesn’t exist in a vacuum—it’s part of a constantly shifting economic mix. Things like inflation and how much people are saving play a big role. Let’s break down these indicators and see what they tell us about the market right now.

Inflation

Inflation is a measure of how prices change over time for goods and services people purchase. A certain level of inflation is expected and even healthy in a given year. The Federal Reserve aims for 2% per year.

The Consumer Price Index for all urban consumers rose 0.3% in December 2025 on a seasonally adjusted basis, bringing inflation to 2.7% over the past year. While prices are still increasing, this pace is more moderate than in recent years and closer to long-term targets.

For the real estate market, steady inflation can help prevent sharp jumps in mortgage rates, even if big rate cuts aren’t happening just yet. That kind of stability can give buyers more confidence, since borrowing costs feel more predictable instead of constantly climbing. For sellers, it helps keep demand steady without pushing prices into rapid spikes, setting up a calmer, more balanced housing market in 2026.

Personal saving rate

The personal saving rate stayed low at 3.5 to 3.7% at the end of 2025, meaning most people are spending most of their income rather than saving. For buyers, this could make it harder to save for a down payment, and some may still struggle to enter the market despite being able to handle monthly payments.

According to ATTOM’s Q4 2025 affordability report, median-priced single-family homes and condos were less affordable than historical averages in 99% of the 594 counties analyzed, as the national median home price held near a record high of $365,000. There is some good news, however: in 86% of the counties analyzed, homes were slightly more affordable in Q4 than in Q3, and mortgage rates eased to the low-6% range by year’s end.

The low personal saving rate suggests many buyers will still need time to build a down payment, even with slightly lower rates and improving affordability. Buyers who have been able to save may have an edge, while those without a cash cushion might remain on the sidelines.

For sellers, steady demand from motivated buyers, encouraged by improving affordability, makes it a good time to list, particularly if homes are priced realistically. Overall, the market is likely to stay competitive but more balanced, giving cautious optimism to both buyers and sellers.

How to succeed in the current real estate market

As we saw, the 2025 housing market was tough, with low inventory and slow sales making it challenging for buyers and sellers. In 2026, more homes are expected to hit the market, and prices are likely to keep rising, giving everyone more options and flexibility. Staying informed and planning are key.

HomeLight can help by providing up-to-date market insights, connecting you with trusted agents, and guiding you through every step of buying or selling. Here are some tips to help you navigate the current real estate market.

Tips for home buyers in 2026

• If you have flexibility, expand your search area to more affordable regions. Try this tool from the NAR to learn more about affordability in a specific state or metropolitan area.
• If there are more homes than buyers in your area, work with an experienced agent who knows the local market and can spot new listings quickly and help you craft a strong offer that stands out.
• As mortgage rates stabilize at the low 6% range, lock in your rate early if possible, compare lenders to get the best deal, and factor monthly payments into your budget to stay comfortable long-term.
• If you plan to buy and sell a home this year, HomeLight’s Buy Before You Sell program can help you unlock your equity to make a strong, non-contingent offer on a new home before selling your current home. You can move on your schedule and list your home vacant — it’s a win-win.

Tips for home sellers in 2026

• With home sales expected to rise, take advantage of the momentum by partnering with a top real estate professional who can price your home right, market it effectively, and guide you through every step of the selling process. HomeLight can connect you to a top-performing agent with a track record of satisfied clients. Our service is completely free, and in two minutes, we’ll recommend the best agents near you.
• With more homes hitting the market and buyers having more choices, focus on high-impact improvements that boost your home’s appeal and help it stand out. 76% of buyers want move-in-ready homes.
• Work with your agent to set a competitive list price for your home. Our survey indicates that overpricing and a lack of concessions are the top deal-breakers for buyers in the current real estate market. To get an idea of what your home is worth, check out HomeLight’s free home value estimate.

If you’d rather not go through the work of listing your house, consider requesting a cash offer from HomeLight’s Simple Sale platform, which provides cash offers for homes in almost any condition across the nation. You can skip repairs, staging, and showings.

Tell us a bit about your home and your selling timeline, and we’ll send over a cash offer in as few as 24 hours. With Simple Sale, you can also compare your offer to an estimation of what you’d fetch on the open market.

Writer Hayley Abernathy contributed to this article.

Header Image Source: (Chris Norberg / Unsplash)