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U.S. Housing Market Remains Sluggish Despite Rate Decrease

  //house-home.news-articles.net/content/2026/01/2 .. rket-remains-sluggish-despite-rate-decrease.html
  Published in House and Home on Sunday, January 25th 2026 at 11:58 GMT by Los Angeles Daily News
      Locale: UNITED STATES

ARLINGTON, Va. - Despite a welcome decrease in mortgage rates, the U.S. housing market continues to grapple with sluggish sales and persistent inventory shortages, according to a recent report by the National Association of Realtors (NAR). December's figures, released Sunday, paint a picture of a market struggling to regain momentum, with existing-home sales remaining significantly below historical averages.

Persistent Weakness in Sales

Existing-home sales experienced a 3.4% decline in December, marking the culmination of a year where sales volumes fell 18% below the historical average. While a rate decrease would typically stimulate demand, the chronic lack of available properties is acting as a significant bottleneck. The median existing-home price, while still elevated, registered at $382,600, reflecting a 4.1% increase compared to the same period last year. This price growth, though slower than in previous years, underscores the continued pressure on buyers.

Mortgage Rates and Affordability

The recent dip in mortgage rates represents a positive development for prospective homebuyers. The average 30-year fixed mortgage rate currently hovers around 6.5%, a considerable decrease from the peak of 7.8% observed in late 2023. This reduction has undeniably improved affordability, but it hasn't been enough to fully compensate for the lack of available homes. The impact of lower rates is being partially muted by the already elevated price points and the competitive environment that scarcity breeds. Many potential buyers are still finding that even with lower rates, the total cost of homeownership remains a significant hurdle.

The Inventory Crisis: A Key Constraint

The core issue plaguing the housing market is the consistently low inventory. The number of homes available for sale remains precariously close to historic lows, with just 1.32 million homes on the market in December. This scarcity has fostered a highly competitive buying environment. Bidding wars are still common in many areas, pushing prices upwards and delaying the homeownership timeline for many Americans. Sellers, understandably hesitant to relinquish their current low mortgage rates, have been reluctant to list their properties, further exacerbating the problem.

"Buyers are still facing a tough market," observes Lawrence Yun, NAR's chief economist, encapsulating the sentiment shared by many real estate professionals and prospective homeowners. His advice to buyers - patience and persistence - highlights the reality of the situation. Waiting for the right property, and potentially dealing with multiple offers, remains the norm in many desirable locations.

Looking Ahead to 2026 and Beyond

The NAR's forecast for 2026 offers a glimmer of hope. The expectation is that inventory levels will gradually increase throughout the year, providing buyers with more choices. A continued stabilization of mortgage rates - avoiding significant spikes - is also anticipated. However, the market is not expected to experience a dramatic turnaround. The lingering effects of past construction slowdowns and demographic shifts will likely continue to shape the landscape.

Experts suggest that the increase in inventory will likely be driven by a combination of factors. Some homeowners who have been hesitant to sell due to favorable mortgage rates may finally decide to move, while new construction projects coming online will also contribute to the growing supply. The pace of this inventory increase remains a crucial variable, as a rapid surge could put downward pressure on prices, while a slow trickle might not be enough to meaningfully ease the pressure on buyers. Ultimately, the 2026 housing market is anticipated to remain challenging, albeit with a slightly more balanced dynamic between buyers and sellers than what has been observed recently.