The 2025 housing market was a mixed bag. The past 12 months offered more homes available for sale and at slightly lower borrowing costs. Home prices, however, remained too steep for many middle-class Americans, causing properties to sit on the market longer and resulting in lower-than-expected sales. But 2025 wasn’t just a rollercoaster for buyers and sellers. Homebuilders were impacted by the Trump administration tariffs on construction materials and their effect on their bottom line. Here’s a deeper dive into what played out this year in different aspects of the housing market, along with what some experts predict will happen in 2026.
ALL ABOUT INVENTORY – PAST, PRESENT AND FUTURE
Experts predicted inventory would rise slightly in 2025 because demand for housing had surged since the COVID-19 pandemic.
What actually happened: The inventory of homes for sale made significant gains this year, continuing to grow out of the tightness the market experienced after the pandemic. November saw 1,302,638 active listings for sale, including single-family homes, townhouses and condominiums, which represented a 17% jump year over year, according to Homes.com research.
Yun, chief economist for the National Association of Realtors, said some homeowners finally are parting with their low-interest-rate mortgages. “Homeowners had indicated they would never give up the 3% to 4% rate they refinanced into in 2020-2021,” he told Homes.com. “But over time, some homeowners are needing to give up the low rates for the next home due to major life-changing events.” November’s inventory was nearly double the number seen in February 2022, when it hit 677,610 nationwide — the lowest point on record going back to 2010, according to Homes.com. To put that number in perspective, the inventory for single-family homes alone in November 2025 was 1,030,770.
What they expect in 2026: Inventory will continue to grow in 2026, both in new construction and existing homes, economists said. Yun said some homeowners plan to list their properties eventually, but they are still waiting for more buyers.
“Evidently, homeowners are not desperate to sell given the comfortable financial position on housing wealth and historically low mortgage default rates,” he said. “Some homeowners who tried to sell but haven’t succeeded appear to be delisting the property over the winter months and waiting for the spring homebuyer market.”
ALL ABOUT HOME PRICES, PAST PRESENT AND FUTURE
Many economists and experts predicted that home price growth would likely slow down, finally.
What actually happened: The experts got this one right. The last several years have been defined by significant growth in home prices, mostly a result of the unusual mismatch between supply and demand that began during the COVID-19 pandemic. As more supply arrived, though, price growth across the country slowed — and even declined in some regions.
The latest exclusive data from Homes.com showed that, as of November, home prices rose 2.4% in November, down from 4.7% the same month a year ago. That’s also significantly slower than the 22.6% increase in May 2021 when home-price growth peaked.
The median home price stood at $385,000, up $9,120 from November 2024, and has remained between $375,000 and $395,000 for most of the year.
What they expect in 2026:
Most economists said they expect the slowdown to continue in 2026. However, if there’s a significant decline in mortgage rates, that could create an uptick in demand and place upward pressure on home price growth, economists said.
For now, though, the market seems to have found somewhat of a balance, said Case, the chief residential economist at Homes.com.
“There seems to be a level of comfort in the market: People aren’t afraid to transact, and they’re able to reach agreements at prices that are neither depressingly low nor unsustainably high,” he said.
SALE VOLUME – PAST, PRESENT AND FUTURE
Economists expected existing home sales to improve marginally in 2025 compared to 2024 but still fall short of pre-pandemic levels.
What actually happened: That projection generally played out, said Odeta Kushi, deputy chief economist at financial services firm First American, told Homes.com via email. As of October, she noted, sales were about 2% higher than a year ago — but still more than 20% below pre-pandemic norms.
The listings boost drove some sales this year, but there are still many homeowners staying put because they are locked into the historically low mortgage rates they obtained during the pandemic.
What they expect in 2026:
More gradual improvement appears likely in 2026 due to pent-up demand, with gains varying widely by region, Kushi said.
In many markets, 2026 income growth will outpace the leveling of home prices, putting more consumers in a position to buy as they form households, move for new jobs and downsize, Kushi added.
“With inventory rising slowly and affordability remaining constrained, transactions are likely to grind higher as life events continue to drive housing decisions, rather than rebound sharply as 2026 unfolds,” she said.
DAYS ON MARKET – PAST, PRESENT AND FUTURE
Experts predicted that the average number of days a home remained on the market would rise in 2025, partially because more properties would become available for sale as the year progressed.
What actually happened: The economists got this one right. “In general, the increase in median days on market coincides with an increase in the inventory of homes available for purchase,” said Brad Case, chief residential economist at Homes.com. “Buyers have more homes to choose from, and they’re not in a hurry to grab one of them, especially since mortgage rates have been fairly stable after having declined by about 0.75 percentage points from their early-summer levels.”
After January and February brought the year’s peak days — with homes spending a median of 41 and 42 days on the market, respectively — the time frames contracted, falling to a low of 28 days in July before ticking back up as autumn set in, according to the National Association of Realtors. In November, NAR’s final dataset for 2025 showed homes spent a median of 36 days on the market, up from 34 in October and longer than the 32 days recorded a year earlier.
“The increase in days on market that we’ve seen over the last few months is entirely in line with normal seasonal fluctuations,” Case said.
What they expect in 2026: Sellers may have to adjust their expectations — and price carefully — as the median days on market metric continues to inch toward pre-pandemic figures.
Homes priced even slightly above market could trigger more days on the market and price reductions, NAR found in its Housing Hot Spots 2026 report.
“Well-priced homes will stand out in the market immediately,” NAR senior economist Nadia Evangelou said in a December forecast.
NEW HOME SALES – PAST, PRESENT AND FUTURE
What they said would happen: Experts watching the 2025 housing market said they expected new-home construction and sales to bounce back in 2025. The National Association of Realtors, for example, expected new-home sales to jump 11%, while the National Association of Home Builders — which eyes single-family construction starts rather than sales — anticipated flat growth year over year. The trade group’s expectations hinged on regulatory and interest rate relief, which would bolster homebuilder activity and help buyers with tight finances.
What actually happened: That projection didn’t materialize. By year’s end, sales of newly built homes actually fell 2%, NAR said. New single-family construction starts are expected to close this year with a 7% year-over-year decrease, according to NAHB Chief Economist Robert Dietz.
Dietz said that “what we saw was basically a wait-and-see environment when it came to big decisions like homebuying or business decisions, as we saw a lot of economic policy uncertainty,” said Dietz. “And the big one is that interest rates remained in that above-6% range, which priced out a lot of homebuyers.”
What they expect in 2026: NAR predicts a 5% increase in new-home sales in 2026, and NAHB foresees production of single-family houses rising 1%.
MORTGAGE RATES AFFECT HOME PURCHASING- PAST, PRESENT AND FUTURE
What they said would happen: Housing economists said homebuying activity for 2025 will depend largely on which direction mortgage rates shift.
What actually happened: Mortgage rates have slowly declined since January, causing a jump in home loan applications and refinance activity. At the start of the year, the average rate on the fixed, 30-year home loan was 7.04%, according to Freddie Mac. By mid-December, the rate fell to 6.22% — nearly a full percentage point lower than where they started. That’s been a meaningful change for homebuyers and highlights how much broader economic forces influence mortgage rates.
“We had expected mortgage rates to generally decline from some of the highs that we saw in the years prior,” Jeana Curro, head of agency mortgage-backed securities research at Bank of America, told Homes.com.
Curro and her team forecast that rates would average around 6.5% this year, based on what was happening with the 10-year Treasury yield. The yield stood at around 4.1% as of mid-December. The movement in mortgage rates is only part of the story; another key piece is how many people actually applied for loans.
Purchase applications were stronger than last year, helped by more inventory and slower price growth. Still, applications rose and fell week to week in 2025 as rates and affordability shifted. Meanwhile, the number of applications for refinanced home loans surged this year but remained highly sensitive to rate changes — jumping when they fell and pulling back when they rose.
What they expect in 2026: In short, the year played out slightly better than what industry experts had forecast: Rates declined, fueling more activity, especially refinancing.
Looking ahead, Curro expects mortgage rates to float around 6.25% in 2026.