If the 2025 housing market had a personality, it would be measured, stubborn, and quietly opinionated. It didn’t crash. It didn’t surge. And it absolutely refused to behave dramatically just because experts wanted it to.
Instead, 2025 delivered a market defined by slow recalibration—where some forecasts landed squarely on target, others missed, and buyers and sellers alike had to adjust expectations.
Here’s what really played out this year, and what economists say to watch heading into 2026.
Inventory Finally Moved in the Right Direction
One of the most accurate predictions of the year was that housing inventory would increase—and it did in a meaningful way.
Active listings rose roughly 17% year over year, with more than 1.3 million homes on the market nationwide by November, according to Homes.com. That’s nearly double the inventory levels seen at the market’s tightest point in early 2022.
Economists at the National Association of Realtors point to life events—not rate relief—as the main driver. Homeowners with ultra-low mortgage rates didn’t suddenly want to sell; they needed to. Job changes, family shifts, downsizing, and relocations slowly loosened the lock-in effect.
Looking ahead, most experts expect inventory to continue growing in 2026, especially as sellers who sat out the winter return in the spring.
Home Prices Slowed — But Didn’t Fall
After years of runaway appreciation, price growth finally cooled in 2025. And for once, forecasts got this one right.
Nationally, home prices rose about 2–2.5%, a sharp slowdown from the double-digit gains of recent years. The median home price hovered around $385,000, staying relatively stable throughout the year.
This moderation was exactly what economists expected: higher mortgage rates capped buyer demand, while limited inventory prevented prices from falling significantly. The result? A market that felt far more balanced than buyers had seen in years.
Most experts anticipate this slower pace of appreciation to continue in 2026—unless mortgage rates drop sharply, which could reignite competition.
Mortgage Rates: Lower, but Not Cheap
Rates didn’t fall as much as many hoped—but they did settle.
The average 30-year fixed mortgage rate declined from just over 7% at the start of the year to about 6.2% by December, providing enough relief to encourage activity without triggering a buying frenzy.
That stability mattered more than dramatic drops. Buyers could plan. Sellers could price realistically. And while refinancing remained limited, applications surged whenever rates dipped.
Most economists expect mortgage rates to hover around 6.25% in 2026, reinforcing the idea that the era of ultra-cheap money is likely behind us—for now.
Existing-Home Sales Improved… Slowly
Predictions of a major rebound in existing-home sales missed the mark. Instead, sales rose modestly—about 2% year over year—and remained well below pre-pandemic levels.
Why? Affordability. Even with more listings, high prices and borrowing costs kept many buyers sidelined. Transactions happened, but life events—not enthusiasm—continued to drive decisions.
Experts expect gradual improvement in 2026, particularly as income growth outpaces price growth in some regions. But no one is calling for a dramatic surge.
Homes Took Longer to Sell (And That’s Normal)
As inventory increased, so did days on market—another forecast that played out as expected.
Homes spent a median of 36 days on the market in November, up from 32 a year earlier. Buyers had options. They slowed down. And pricing mattered more than it had in years.
Economists emphasize that this shift isn’t a warning sign—it’s a return to healthier, pre-pandemic norms. In 2026, sellers who price accurately should still move quickly, while overpriced homes may linger or require reductions.
New Construction Fell Short of Expectations
This was one of the bigger misses of 2025.
Despite predictions that new-home sales would rebound, they actually declined about 2%, while single-family construction starts fell roughly 7% year over year.
Builders faced a tough combination of high interest rates, affordability pressures, and uncertainty around construction material tariffs. Many adopted a wait-and-see approach rather than aggressively expanding.
Looking ahead, forecasts for 2026 are cautious but optimistic, with modest gains expected if rates stabilize and buyer confidence improves.
The Big Picture Takeaway
The 2025 housing market wasn’t broken—it was resetting.
Prices stopped racing ahead. Inventory improved. Buyers gained leverage. Sellers had to be more strategic. And the market quietly found a rhythm that felt far more sustainable than the chaos of recent years.
As we move into 2026, the theme appears to be steady over spectacular. And honestly? After the past few years, that might be exactly what the housing market—and everyone in it—needed.
