**Sources (with links) used for this article are compiled at the bottom. These sources would also be good for further reading/research into the topic.
As we head into December 2025, the national housing market is showing some hopeful signs amid ongoing challenges. Real estate agents have noticed that things feel a bit different from a year ago. Mortgage rates have finally eased off their peak, buyer demand is inching back, and more homes are available for sale. It’s still not a booming market by any stretch, but the landscape is becoming a little more balanced as the year winds down. In this month’s Market Highlight, we’ll break down the key trends, from interest rates to home sales, prices, and what to expect going forward.
Mortgage Rates Are Finally Easing
One big relief this season is that mortgage rates have settled down. The average 30-year fixed rate is hovering around the mid-6% range, which is lower than what we saw for much of the past two years. In fact, as of late November, the 30-year rate was about 6.3%, whereas a year ago it was closer to 6.8%.
That may not sound like a huge difference, but for buyers it means slightly lower monthly payments than last holiday season. More importantly, rates are down from the 7%+ levels we experienced at the start of 2025.
Back in early spring, many buyers were discouraged by rates pushing toward 7%; now, with rates a bit lower, some of those folks are tiptoeing back into the market.
Why are rates easing?
A lot of it has to do with broader economic signals. Inflation has been cooling, and the Federal Reserve has already cut its benchmark interest rate a couple of times this fall. There’s widespread speculation that the Fed might even approve another small rate cut at its mid-December meeting, given some recent softer economic data.
If that happens, it could put further downward pressure on mortgage rates (which are influenced by economic outlook and Fed policy). Even the anticipation of a Fed move has helped calm the mortgage market. For the past few months, rates have not only been lower but also less volatile than before.
As one industry analyst noted, “As long as rates don’t spike back above 7%, we have a situation we can work with in 2026.”
In other words, keeping rates in this mid-6% zone or lower may be the key to unlocking more housing activity in the coming year.
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Home Sales Remain Subdued, But Show Glimmers of Life
Home sales in the U.S. are ending the year at relatively low levels, though there have been a few glimmers of improvement lately. In October, existing home sales actually ticked up about 1.2% from the month before.
That was the first monthly gain in a while, a sign that buyers responded to the slight drop in mortgage rates this fall. Sales were also up a bit (around 1–2%) compared to October of last year.
However, we need to keep that in perspective – the annual sales pace is still only about 4.1 million homes (seasonally adjusted), which is well below the 5 to 6 million per year that was common before the pandemic.
In fact, the market hasn’t seen an annual sales rate above 5 million in over three years now.
So while it’s encouraging to see a modest uptick, home sales remain far below “normal” levels. High mortgage rates and high prices earlier in the year put a damper on many buyers’ plans, and we’re still feeling that.
Pending Sales
Looking at pending sales (contracts signed but not yet closed), the picture is mixed. Pending home sales got a boost late in the summer – one index showed contract signings in August were up about 4% year-over-year, which was a hopeful sign back then. By fall, pending sales were essentially flat to last year’s levels.
In other words, buyer activity in terms of new contracts isn’t drastically worse than a year ago, but it’s not significantly better either. The good news is that as mortgage rates leveled off, buyer traffic stabilized. According to Freddie Mac, homebuyer activity showed resilience nearing year-end, with pending sales in November at the highest level seen in about a year. That suggests there are still motivated buyers in the market, even if many others are waiting on the sidelines.
Seasonally...
Seasonally, we’re also entering the slowest time of the year. December and the holiday period typically bring a drop in both listings and sales as people focus on festivities and travel. This seasonal slowdown is normal and expected. So don’t be alarmed if the number of closings in December comes in low – that happens every year.
The real question is whether we’ll see a bounce-back in the spring of 2026. If rates keep trending down or even hold steady, we might anticipate a busier spring market as some of the pent-up demand (buyers who postponed plans in 2024–2025) finally starts to emerge.
More Homes for Sale
One positive development in 2025 has been a noticeable increase in housing inventory – that is, the number of homes available for sale. In many parts of the country, buyers have more options now than they did a year ago. Nationally, the inventory of homes on the market has grown by double digits since last fall.
In October, the total number of active listings was about 17% higher in the West and South, and about 9–12% higher in the Northeast and Midwest, compared to a year prior.
In fact, all of the 50 largest metro areas saw an increase in listings year-over-year.
Pre-Pandemic Norms
For the first time in a long time, inventory levels in some regions have even risen back to around their pre-pandemic norms. A handful of states in the West and South now have as many or more homes for sale than they did in 2019. Overall, the total number of homes on the market nationwide is at its highest level since 2019.
This is partly because homes are sitting on the market a bit longer (so listings accumulate), and partly because more sellers have been willing to list this year. To be fair, inventory is still tight in some areas – especially in parts of the Northeast and Midwest where new construction has lagged, and many owners are staying put. But the severe shortage of homes that defined the pandemic housing frenzy has eased considerably in 2025.
Real Estate Agent's Perspective
From a real estate agent’s perspective, this inventory boost is a welcome relief. More listings mean more opportunities to match buyers with homes, and it reduces some of the intense competition we saw before. Buyers can actually take a little more time to shop now – the typical home is on the market for about 63 days, which is roughly five days longer than it was at the same time last year.
That’s a subtle sign of a cooler market: houses aren’t getting snapped up quite as fast. In fact, the current median time on market (around two months) is pretty close to historical norms.
Back in the crazy 2021 market, homes would sell in mere weeks or even days. Now we’re back to a situation where a buyer might be able to see a house twice, think it over for a few days, and then decide to make an offer – a much healthier dynamic.
Double-Edged Sword
It’s worth noting that the increase in inventory is a bit of a double-edged sword. On the one hand, more supply is good for buyers and can help ease upward pressure on prices. On the other hand, the reason inventory piled up is that buyer demand slowed down this year due to affordability challenges.
As one economist put it, inventory has reached a high not seen in years, but “that could help ease price pressures” even as it “also reflects slower buyer activity”.
In other words, we finally have more homes on the market, but that’s partly because many buyers have put their searches on pause. The hope is that as rates come down and confidence improves, more of those buyers will re-enter – and we’ll need that inventory to accommodate them.
Home Prices Leveling Off
After years of roller-coaster moves, home prices are essentially flatlining on a national level. Overall, prices have softened slightly in recent months, which is a big change from the rapid gains we saw during 2020–2022. As of October, the median listing price across the U.S. was roughly $424,000, which was barely a 0.4% increase from a year earlier.
In some regions, prices are even down a bit year-over-year. The West, which had some of the hottest markets, saw median list prices about 2–3% lower than last fall. The South had a small decline (around 1% down), while the Northeast was flat and the Midwest was up very slightly (less than 1%).
For home sellers, this means we’re in a very different environment – you can’t just list at any price and expect a bidding war. Many sellers have had to become more realistic and even consider modest price cuts to attract buyers.
Stalled and Adjusted
It’s important to clarify that we haven’t seen any dramatic price crash or free-fall; rather, prices have stalled and adjusted after the huge run-up of the past few years. Think of it as the market taking a breather. From 2019 through 2022, home values nationally surged by well over 30%.
That kind of growth was unsustainable, especially once mortgage rates jumped up. Now, with affordability stretched, prices are finding a ceiling. In a lot of markets, list prices are slightly lower than they were mid-2023, and buyers have a bit more negotiating power on individual sales.
We’re hearing more stories of sellers accepting offers below asking price, paying for buyer closing costs, or agreeing to inspection repairs – things that were rarer during the red-hot times.
More Supply & Longer Selling Times
Another trend helping keep prices in check is the rise in inventory we discussed. More supply and longer selling times naturally curb price growth. And remember, many buyers simply can’t afford to pay more with interest rates around 6–6.5%.
The result is what many are calling a more balanced market. It’s not a buyer’s market outright – inventory is still limited by historical standards, and nice homes well-priced will sell – but it’s no longer a strong seller’s market either.
For real estate agents, setting the right price is crucial now; gone are the days of overshooting the market. Homes priced correctly are still selling, while overpriced listings are sitting and eventually seeing markdowns.
New & Existing Home Price Divergence
One interesting phenomenon: because of the unique dynamics right now, we’ve seen less divergence between new and existing home prices. Historically, brand-new homes cost more than similar existing homes (new builds are shiny and come at a premium).
But with existing home owners reluctant to sell (many stuck on ultra-low mortgage rates from a few years ago), new construction has taken on a bigger role in the market. Builders have had to adjust prices to move their inventory, and in some cases, the median new home price is now roughly the same as the median price of an existing home.
In fact, in August, the median new home sold for about $413,500, which was slightly less than the median price for an existing home ($422,600) that month. That’s practically unheard of, and it shows how much builders have discounted and incentivized to attract buyers.
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Builders Step Up with Incentives
Speaking of new construction, this has been the year of the home builder incentives. Builders know that higher mortgage rates have made buying tough, so they’ve gotten creative to drum up sales. This fall, over one-third of home builders cut their base prices by about 6% on average.
On top of that, roughly 65% of builders offered special incentives in recent months. These incentives can include things like temporary mortgage rate buydowns (where the builder subsidizes a lower rate for the buyer for the first couple of years), help with closing costs, free upgrades or amenities, or even outright price reductions on spec homes.
If you’ve driven past new subdivisions, you’ve probably seen banners advertising “Seller will pay 2 points” or “2-1 Buydown available!” – that’s builders trying to meet buyers halfway on financing costs.
Strategy is Working
The strategy is working to a degree. New home sales have been a relative bright spot because builders can adjust quickly – they’ve been throwing in deals and even building slightly smaller, more affordable homes to hit price points that buyers can handle.
As we mentioned, new homes are now priced very competitively with existing homes. For buyers who can’t find what they want in the resale market, new construction is an attractive option, especially if it comes with a perk like a 5% mortgage rate (after a buydown) or a free appliance package.
Real estate agents who work with builders or have clients open to new homes have found this to be a key opportunity in 2025.
What to Expect in December and Beyond
Looking at the month ahead, December 2025 will likely be relatively quiet in terms of market activity. Seasonality will dominate: many potential sellers will hold off until January or spring, and many buyers will be busy with the holidays. We might see fewer new listings hitting the market this month, and some sellers even pulling their homes off the market temporarily, planning to relist later.
For active buyers, though, this quieter period can present opportunities – there’s less competition, and some sellers who need to sell before year-end might be more flexible on price. It’s a good time for real estate pros to counsel serious buyers that December deals are possible (imagine getting into a new home just in time for New Year’s).
Fed Meeting in Mid-December
On the mortgage front, all eyes are on the next Fed meeting in mid-December. If the Fed announces a rate cut, even a small quarter-point, it could boost confidence and potentially nudge mortgage rates a bit lower heading into January.
Already, the expectation of a Fed move has kept mortgage rates in check. Economists and traders are currently betting that the Fed will likely cut rates again – some estimates put the odds above 80% for a December cut.
Turning to 2026
As we turn the page to 2026, there is cautious optimism that the housing market will gradually pick up momentum. Major housing forecasters predict that if mortgage rates continue a gentle downward trend, home sales will improve next year.
For instance, Fannie Mae’s latest outlook expects the 30-year fixed rate could dip to around 5.9% by the end of 2026, and they project total home sales rising from roughly 4.7 million in 2025 to about 5.2 million in 2026. That’s not a return to the crazy highs, but it would be a meaningful rebound.
More buyers would re-enter the market with a 5-handle on mortgage rates, and more existing homeowners might be willing to move (since selling a home with a 3% loan is a lot more palatable if your next loan is, say, 5.5% instead of 7%).
Demographics
Demographics are also on our side. The largest group of millennials are now in their early 30s – prime homebuying age – and coming up right behind them is Gen Z. Surprisingly, Gen Z is already starting to become a factor in the market: by their late 20s, Gen Z’s homeownership rate is slightly ahead of where millennials stood at the same age.
This suggests a pipeline of younger buyers will keep demand alive in the years to come, as long as we can supply affordable housing for them. Real estate agents who build relationships with these younger prospects could be well-positioned. Many of these Gen Z buyers will be looking for that starter home or condo and will need guidance (and pre-approvals!).
TLDR...
In summary, the national real estate and mortgage market heading into December 2025 is showing signs of stabilization. We have moderating mortgage rates, more inventory, and flat-to-slowing prices, all of which point toward a market that is moving from intense frenzy to a more normal, sustainable pace.
There are still challenges – affordability is tight, and many buyers are rate-sensitive – but conditions for both buyers and sellers are arguably better than they were a year ago. As professionals, staying on top of these trends lets us set the right expectations with clients. The winter may be calm, but there are opportunities out there, and the stage is being set for a potentially busier spring.
For now, enjoy the holiday season, keep educating your clients, and be ready to hit the ground running in the new year. The housing market story of 2025 has been one of adjustment and resilience. Here’s to hoping 2026 brings a fresh wave of activity and success for all of us in the industry!
Sources
- Neil Pierson – HousingWire: “Will steady mortgage rates and another Fed cut boost home sales?” (Nov 25, 2025).
- Melissa Dittmann Tracey – NAR Realtor Magazine: “More Than One-Third of Builders Continue to Cut Prices” (Oct 20, 2025).
- Realtor.com Research: “October 2025 Monthly Housing Market Trends Report” (Nov 2025).
- Freddie Mac PMMS: “Mortgage Rates Decrease – Weekly Survey” (Nov 26, 2025).
- Fannie Mae Newsroom: “Mortgage Rates Expected to Move Below 6 Percent by End of 2026” – Economic & Housing Outlook (Sept 23, 2025).