The real estate market in late 2025 remains challenging, marked by high prices, elevated mortgage rates, and slow sales activity, but there are signs of cautious optimism and expectations of improvement heading into 2026.​​

Current Market Overview

The housing market in November 2025 is characterized by moderate borrowing costs, with average 30-year fixed mortgage rates hovering around 6.1%–6.3%. Although this reflects a slight improvement in affordability compared to earlier in the year, rates remain well above the historic lows of the previous decade. Nationally, demand is still sluggish, and many buyers remain on the sidelines despite a modest softening in borrowing costs. Inventory levels are rising but overall availability continues to fall short of pre-pandemic averages. In several major metro areas, prices have stagnated or declined, with some regions—like Austin and Florida—seeing sharper price drops.​​

Price and Inventory Trends

Home prices remain near record highs in most regions, though growth has slowed compared to previous years. Many markets report more frequent price cuts and incentives from sellers, as homes linger longer on the market. Inventory is expanding gradually, driven by increased listings, but still does not meet the threshold for a balanced market. Analysts note that the historically low supply of homes continues to act as a safeguard against a dramatic market crash, even amid economic uncertainty.​​

Economic Factors and Buyer Sentiment

Recent Federal Reserve interest rate cuts have lowered the federal funds rate to around 3.75%–4.00%, spurring some optimism among homebuyers. Inflation, while having eased markedly since its 2022 peak, remains a concern, and economic unease persists among both buyers and sellers. High-income buyers, previously driving the market, have started to scale back on spending, reflecting broader concerns about job security and financial stability.​

Predictions for 2026

Expert forecasts suggest the real estate market may find renewed momentum in 2026, with home sales projected to jump between 9% and 20% compared to 2025, according to Fannie Mae and NAR projections. Mortgage rates are expected to decline slowly, possibly reaching around 5.9% by the end of 2026, which could boost affordability for buyers. However, most analysts expect any recovery to be modest, with price growth limited to 2–4% and continued regional variations—markets in the Sun Belt may cool further, while tight and expensive conditions persist in the Northeast and West.​

What to Watch

• Continued moderation in home price growth and more price cuts.
• Increased housing inventory, though still below historic norms.
• Mortgage rates potentially slipping below 6% by late 2026.
• A possible uptick in home sales activity as pent-up demand unlocks.

While a dramatic rebound is unlikely, the stage is set for gradual improvement and normalization in the housing market over the next year. Both buyers and sellers should temper expectations and remain mindful of shifting affordability and regional differences as the market evolves.