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US Housing Market Struggles Continue into 2026

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  Published in House and Home on Wednesday, January 14th 2026 at 14:20 GMT by Bangor Daily News

Washington, D.C. - January 14th, 2026 - The US housing market's struggles, well-documented throughout 2025, show little sign of abating as we enter 2026. Data released by the National Association of Realtors (NAR) paints a consistent picture of a market grappling with high mortgage rates, persistently elevated home prices, and diminished buyer activity - a trend experts now anticipate will continue to shape the landscape for the foreseeable future. Following four consecutive years of decline, a prolonged period of adjustment seems inevitable.

The ongoing downturn is a stark contrast to the frenzy experienced in the years prior to 2023. The key culprits remain stubbornly high mortgage rates and inflated home values, effectively creating a significant affordability barrier for potential homebuyers. While hopes for Federal Reserve intervention and subsequent rate reductions existed throughout 2025, persistent inflation dashed those expectations, locking in mortgage rates at levels unseen in recent history.

A Broad-Based Decline

Existing home sales plummeted by an estimated 12.5% in 2025 compared to 2024, underlining the depth of the slowdown. New home sales also suffered, decreasing by approximately 8.7%. This decline wasn't geographically uniform; while most regions felt the pinch, the Northeast and Midwest were particularly hard hit, experiencing sharper drops in sales volume. The Sun Belt, often a beacon of resilience in previous years, demonstrated only moderate activity, signaling a broader market correction.

According to Dr. Eleanor Vance, NAR's chief economist, "The unsustainable pace of the early 2020s simply wasn't viable. High mortgage rates coupled with elevated home prices created a significant affordability crisis, effectively pricing many potential buyers out of the market. We're seeing a readjustment, and while it's uncomfortable, it's a necessary correction."

The Rate and Price Conundrum

The average 30-year fixed mortgage rate lingered around 7.8% for most of 2025, a far cry from the sub-3% rates witnessed during the pandemic-era boom. This persistent high rate, coupled with slowing but still-significant home price appreciation, has created a perfect storm for affordability. The median home price reached $435,000 in 2025, representing a 3.9% increase compared to 2024, but a marked deceleration from the double-digit percentage gains observed in 2022 and 2023. While price growth has decelerated, inventory remains tight, preventing a significant price correction.

Regional Variations and Emerging Trends

As expected, regional differences shaped the overall narrative. States with rapidly increasing populations and robust job markets, such as Texas and North Carolina, displayed a degree of resilience, though even these areas registered a slowdown compared to previous years. The decline in the Northeast and Midwest was exacerbated by factors like aging populations and slower economic growth. Interestingly, data suggests a growing trend of buyers postponing homeownership, choosing to rent or remain with family members until market conditions improve. This 'wait-and-see' approach is contributing to the depressed sales figures.

The Outlook for 2026 and Beyond

The consensus among analysts is that the housing market will remain challenged throughout 2026. While a modest decrease in mortgage rates is anticipated, the timing and magnitude of any such reduction remain uncertain, heavily dependent on inflation trends and Federal Reserve policy. Dr. Vance emphasized, "While we anticipate some easing, it's unlikely we'll see a rapid return to the ultra-low rates of the past. Affordability will continue to be the primary driver of market activity."

Experts are now focused on observing the impact of evolving demographic trends, remote work patterns, and regional economic shifts. The long-term effects of these factors will likely play a crucial role in determining the future direction of the US housing market. Potential homebuyers are being advised to carefully assess their financial situations and consider long-term investment strategies rather than reacting to short-term market fluctuations. The era of rapid appreciation appears to be over, ushering in a period of increased stability - albeit at a slower pace.