More good news for homebuyers: the number of home sales jumped at the national level in December. Locally, home sales were also up in December, but pending home sales declined, which will likely have a negative effect on January home sales.
Additional positive economic news came last week as inflation numbers continued to improve and the overall economy grew more than it has in years. There are also new measures being implemented that should help the housing market over the longer term. The Trump administration put a stop to financial giants like BlackRock purchasing single-family residences. This will put these homes back into the hands of individual homebuyers and substantially increase the inventory of homes for sale. This should also help bring home prices down.
It also appears that the government may introduce new loan programs to help first-time buyers and allow funds from 401(k) plans to be used for down payments without being subject to taxes. The forecast is for mortgage interest rates to remain around 6% in 2026. My view is that this rate is still too high to offset the high cost of housing, which also needs to decline.
As I have said previously, mortgage interest rates need to come down in combination with lower home prices, and more housing inventory is needed for the national housing market to truly take off. It may be a slow process, but it appears that we are headed in the right direction.
The following is a national housing market update from the National Association of Realtors.
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While the decrease in rates is helping to offset higher home prices, buyers still face a challenging housing market.
Hopeful home buyers may be getting their New Year’s wish: Lower mortgage rates—and they’re fueling an uptick in home sales.
Existing-home sales jumped 5.1% in December, the strongest reading in nearly three years, even after adjusting for seasonal factors, the National Association of REALTORS® reported Wednesday. Sales are up 1.4% from a year ago. December’s gain followed a smaller increase in November, also tied to the drop in mortgage rates that was set in motion this past fall.
It’s the type of building momentum the housing market has been waiting for. After all, “2025 was another tough year for home buyers, marked by record-high home prices and historically low home sales,” says Lawrence Yun, NAR’s chief economist. “However, in the fourth quarter, conditions began improving, with lower mortgage rates and slower home price growth.”
The Mortgage Rate Effect
Housing affordability began improving this fall, despite higher home prices, due to stronger income growth—up 3.8% in October from a year earlier—and declining mortgage rates compared to a year ago, NAR’s Affordability Index shows, as reported on the association’s Economists’ Outlook blog.
The 30-year fixed-rate mortgage averaged 6.19% in December, down from roughly 7% at the start of 2025. That decline has translated into hundreds of dollars in monthly savings for potential buyers and has coincided with mortgage applications for home purchases—a gauge of future home buying—remaining up by double-digit percentages year over year.
Consider a $500,000 home with a 30-year mortgage at 7% and a 10% down payment: A borrower would pay $3,895 per month. At 6.25%—where rates have hovered lately—that payment drops to $3,672, a $223 monthly difference, according to LendingTree.
NAR forecasts mortgage rates will average 6% in 2026. A one percentage point drop—from 7% to 6%—could bring an additional 5.5 million households, including 1.6 million renters, into the pool of potential buyers this year, NAR research shows.
Still, Buyers Face Challenges
But lower rates alone aren’t enough to make the market easy for buyers.
Housing inventories fell 18% in December compared to November, following several months of improvement, NAR’s data shows. While inventories do typically decline during colder months, they remain up 3.5% from December 2024. Buyers are finding more choices than a year ago, but supply constraints remain in many markets.
Buyers need to go in expecting: “Inventory levels remain tight,” Yun says. “With fewer sellers feeling eager to move, homeowners are taking their time deciding when to list or delist their homes. Similar to past years, more inventory is expected to come to market beginning in February.”
Until then, home prices continue to run high—good news for sellers, but a stretch for many buyers. That said, December’s sales data show the pace of home price increases is notably slowing: The median sales price of an existing-home was $405,400 in December, up just 0.4%, from a year earlier, NAR reports.
Economic uncertainty and rising costs have led about 70% of 1,000 prospective buyers surveyed in the fourth quarter of 2025 to say they delayed their home purchase plans. However, respondents said more affordable home prices and lower mortgage rates within the next six months would prompt them to move more quickly, according to RE/MAX’s consumer survey.
Galand Haas
Haas Team Real Estate
541.349.2620