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US Housing Market Hits 30-Year Low in December 2025

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  Published in House and Home on Tuesday, January 20th 2026 at 2:37 GMT
      Locale: UNITED STATES

Washington, D.C. - January 20th, 2026 - The US housing market continues to struggle, with December 2025 marking a sobering milestone: the lowest sales volume in three decades. A persistent lack of affordability, driven primarily by stubbornly high mortgage rates, continues to stifle both buyer enthusiasm and significant market recovery. The situation, according to industry experts, shows little sign of immediate improvement as 2026 unfolds.

Recent data from the National Association of Realtors (NAR) revealed a 6.3% drop in existing home sales last month, placing the seasonally adjusted annual rate at a disheartening 3.39 million. This figure represents the lowest level since 1991, a stark reminder of the challenges facing prospective homeowners. Year-over-year, sales are down a considerable 13.4%, with median home prices remaining significantly elevated compared to the pandemic-era lows.

The Rate Factor: A Persistent Headwind

The primary culprit behind this prolonged slump is the persistent elevation of mortgage rates. Currently hovering around 7.5%, these rates are a far cry from the 3% seen just a few years ago. This increase has substantially increased the overall cost of homeownership, effectively pricing many potential buyers out of the market. The impact is particularly acute for first-time homebuyers, who are not only battling high prices but also facing stiff competition from cash buyers - a phenomenon exacerbated by the overall market uncertainty.

"It's a perfect storm," explains Sarah Johnson, a Minneapolis-based real estate agent. "First-time buyers are experiencing a three-pronged challenge: limited inventory, elevated prices, and these incredibly high interest rates. It's a truly difficult situation for those hoping to enter the market."

Sellers Holding the Line, Buyers Hesitant

The market dynamic is characterized by a stalemate. Sellers, reluctant to significantly lower prices in the face of dwindling demand, find themselves with homes on the market for longer periods. The average time a home spends on the market has now surpassed 60 days, a clear indication of weakening buyer interest. Robert Heck, a financial analyst at Heck Financial Solutions, aptly described the current market as "frozen," emphasizing the lack of movement and the hesitancy on both sides of the transaction.

Inventory Remains Scarce

Despite the slowdown in sales, inventory remains tight. While the number of homes for sale (1.28 million) is slightly up from the previous year, it still falls well short of pre-pandemic levels. This limited supply, combined with high rates, continues to create an uneasy balance within the market.

Looking Ahead to 2026: A Slow and Uncertain Recovery

Economists are tempering expectations for a rapid turnaround in 2026. While a decrease in mortgage rates is widely anticipated, the timing and magnitude of such a decline remain uncertain. The Federal Reserve's monetary policy decisions will be crucial in shaping the trajectory of the housing market.

"We're not anticipating a significant rebound in home sales anytime soon," Heck cautioned. "We'll likely see some price corrections in certain areas - particularly those that experienced the most dramatic price surges during the pandemic boom. These areas are now the most vulnerable to price declines as demand remains subdued."

Navigating the Current Landscape: Advice for Buyers and Sellers

Real estate professionals are providing guidance to both buyers and sellers in this challenging environment. Sellers are urged to adopt a realistic approach to pricing and to brace themselves for a potentially protracted selling process. Buyers are advised to diligently shop around for the most competitive mortgage rates and explore alternative financing options, such as adjustable-rate mortgages or government-backed loan programs. While the current housing market presents significant hurdles, a cautious and informed approach is the key to navigating this frozen market and emerging successfully.