Housing Market Softens Further, Setting Up a Challenging Start to 2026

The housing market is showing signs of more softness than even the "already-soft year-to-date" figures show, in both prices and the number of homes for sale, according to the Realtor.com® Weekly Housing Trends report.

Traditionally, the last few weeks of the calendar year are some of the slowest in the housing market, but the report shows that this week's data highlights a slowdown from the rest of the year. This sets up a challenging starting point for 2026, according to Realtor.com economists.

Mortgage rates this week declined slightly. The average rate on 30-year fixed home loans decreased to 6.21% for the week ending Dec. 18, down from 6.22% the week before, according to Freddie Mac. Rates averaged 6.72% during the same period in 2024.

The most recent jobs report showed unemployment climbing to its highest level in over four years. A weak labor market leads to depressed demand for home purchases. That's because homeowners may not feel stable about their incomes and, if they are, then they're less likely to make a major financial decision, like purchasing a home.

Nationwide, people who are renting are seeing rents fall for 28 consecutive months on a year-over-year basis, which makes renting a home a better option. The report says more households continue to rent, and that means fewer first-time buyers, which leads to less demand for home sales.

Home inventory trends

Active inventory increased 12.4% year over year. This continues to be driven by more homes staying on the market compared to new listings. The number of homes for sale dropped to about 990,000, breaking a 32-week streak above the million-home mark.

New listings dropped again this week, compared to the same week in 2024. New listings, a measure of sellers putting homes up for sale, fell by 0.8% year over year.

Homes for sale continue to take longer to sell than a year ago. Seasonally, December usually sees longer selling times than other times of the year. This season, time on the market is rising less sharply than for the year as a whole (+5 days). This is likely a result of sellers adjusting prices to align with buyer expectations, or long-sitting homes being delisted.

The median list price dropped compared to the same week one year ago. Price growth has been negative year over year for all of November and December.

The price per square foot fell 1.3% year over year, dropping for the 15th consecutive week. Price per square foot grew steadily for almost two years, but the combination of slower sales, rising inventory, and increased price cuts is now clearly reflected in lower listing values, indicating that the market is rebalancing toward buyers.