National housing demand in December 2025 is showing glimmers of improvement compared to last year, driven by slightly lower mortgage rates and increased inventory, but overall sales volume remains subdued and far below pre-pandemic levels. The annual sales pace has not been above 5 million homes in over three years, contradicting the idea of a 3-year high.

Current Market Conditions (December 2025)

The U.S. housing market is currently in a phase of stabilization, moving from an intense seller’s market to a more balanced landscape.

Mortgage Rates: Rates have eased from their peak earlier in the year. As of early December 2025, the average 30-year fixed mortgage rate is around 6.19%, down from approximately 6.69% a year ago. This moderation has encouraged some buyers to re-enter the market.
Home Sales: Existing-home sales saw a modest 1.2% increase in October 2025 compared to the previous month, the first monthly gain in some time. However, the seasonally adjusted annual sales pace of around 4.1 million homes is still very low compared to the typical 5 to 6 million per year seen before the pandemic.
Inventory: The number of homes for sale has increased significantly compared to a year ago, with total active listings at their highest level since 2019. This has given buyers more options and a bit more negotiating power.
Prices: Home price appreciation has leveled off nationally, with the median listing price at roughly $424,000 as of October 2025, a mere 0.4% increase from a year prior. Some regions, particularly in the West and South, have even seen slight price declines.

Several factors are shaping the current demand landscape:

Rate Sensitivity: Buyer activity is highly sensitive to mortgage rate fluctuations. The recent dip in rates has brought some “pent-up” demand back to the market.
Affordability Challenges: Despite the slight dip in rates, affordability remains a major hurdle due to the combination of elevated prices and still-high interest rates.
Builder Incentives: New construction has been a relative bright spot, as builders offer incentives like mortgage rate buydowns to attract buyers and compete with the resale market.
Seller Lock-in: Many existing homeowners with ultra-low mortgage rates (below 4%) are reluctant to sell and take on a new, higher-rate mortgage, which continues to limit the supply of existing homes on the market.

Market Outlook

Looking ahead to 2026, economists cautiously anticipate a more balanced and gradually improving market, with forecasts for further slight declines in mortgage rates and modest home price growth, which should help to unlock more activity