Real Estate Rundown January 2026

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Improved Affordability Encourages Housing Market

The latest housing data points to a market that is slowly stabilizing but still challenging for many households. Rent affordability remains strained, only five of the nation’s largest metros allow two minimum-wage earners to afford a typical rental, despite rents softening for the 28th consecutive month, with modest relief expected as wage floors rise in select markets. On the macro side, easing inflation and a cooling labor market have strengthened the case for future Fed rate cuts, though markets expect policymakers to hold steady in early 2026, keeping mortgage rates relatively stable. That stability is already helping buyers plan, with forecasts from Realtor.com suggesting rates will remain near current levels through 2026. Housing supply trends show early signs of improvement as new listings flatten after recent declines, while buyers gain modest negotiating power, especially with flipped homes, which are selling at larger discounts than in recent years. Overall, the outlook for the year ahead suggests cautious optimism: affordability pressures persist, but steadier rates, improving inventory, and slower price growth are gradually reshaping opportunities for both buyers and sellers.

Mortgage Rate Drop Could Bring More Buyers

Mortgage rates have begun to ease, and forecasts suggest the 30-year fixed rate could dip toward 6% in the year ahead, a meaningful shift from the roughly 7% levels seen earlier in 2025. According to research from the National Association of REALTORS, a one-percentage-point drop in rates could bring more than 5.5 million additional households into the buyer pool, including 1.6 million renters, unlocking pent-up demand that has been sidelined by affordability pressures. Lower rates are expected to benefit first-time buyers most, while also encouraging existing homeowners, many locked into ultra-low rates, to list their homes, helping ease inventory constraints. Early data already shows buyer sensitivity to rate declines, with markets like Florida and Virginia seeing notable increases in sales activity as rates fell into the mid-6% range. While a return to pandemic-era rates is unlikely, even modest declines could significantly improve monthly affordability, boost market confidence, and set the stage for increased housing activity heading into 2026.

A Record Seller-Buyer Gap Is Reshaping Market Power

The U.S. housing market has firmly shifted into buyer’s-market territory, with an estimated 37.2% more home sellers than buyers in November, the widest gap on record outside of this past summer, according to data from Redfin. While both buyers and sellers are pulling back amid affordability challenges and economic uncertainty, buyer demand has fallen faster, giving purchasers more negotiating power in most markets. Buyers are benefiting from increased inventory, price reductions, and seller concessions, particularly across the Sun Belt and West Coast, where new construction has added supply faster than demand has kept up. Meanwhile, seller-leaning markets remain concentrated in parts of the Midwest and Northeast, where limited building activity continues to restrict inventory and support stronger price growth. Overall, unless affordability improves meaningfully, the market is expected to remain tilted toward buyers, with sellers needing to price strategically to attract today’s more cautious pool of purchasers.

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