- Fed lowers their rate another .25% while 30 year mortgage rates continue to hover in the low 6% range.
- Most economists are predicting big increase in the NUMBER of home sales with small or no gain in sales PRICES.
- Rising incomes could finally offset price increases and give buyers some affordability relief.
Looking back over 2025, Real Estate news was dominated by the affordability crisis nationwide. Low inventory issues have caused prices to rise steeply since the beginning of the pandemic. While many homeowners hunker down with their 3% or 4% interest rates, home sellers have mostly been those electing to leave the state and those with a major life event (divorce or death of a homeowner being two of the biggest). Move-up buyers, those looking for more (or less, in some cases) space, have put the brakes on the moves until prevailing interest rates get a little closer to the low rate they would be giving up. With new buyers (those not selling a home), I'm noticing they're becoming accustomed to rates in the low 6% range. No longer are they pining for the unlikely return of rates below 4%! Buyers remember rates over 7% last year, and actually see a little relief at 6% and can look forward to a possible refinance if we get into the low 5% range in the coming years. However, sellers still aren't excited about trading a 3% for a 6% rate, and I understand that.
So, with many homeowners stubbornly not selling, and buyers getting used to 6% rates, we have a pretty well-balanced market. We're no longer in a crazy sellers' market, and we are not yet in a buyers' market, which I have to remind buyer clients every day.
Fortunately, with economic indicators suggesting income growth in 2026, buyer affordability may finally increase. This should bring some more buyers off the fence and back into the market, and I welcome them back!
I'll refrain from making bold predictions for 2026, but I'm optimistic that we'll see a 10-15% growth in the NUMBER of home sales, and a very small increase, maybe 1-2%, in the PRICES of homes compared to 2025 numbers. I CAPITALIZE those two words to make sure we clearly distinguish the difference between the number of homes that sell and the average prices of those homes. News articles love to tease us with clickbait headlines that would suggest home prices are rising or falling drastically, when the articles are usually related to the number of home sales.
If you ever read an article and are curious for how it affects your home's value, or what I think of the article, call or text me anytime. I love talking about this stuff. I do it every day!
Happy Holidays!
Matthew
Posted by Matthew Fletcher on
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