The U.S. housing market has changed of late, with a notable increase in the number of houses for sale in 2025. This stands in sharp contrast to recent years, where excess demand characterized the market. The latest figures put the average home price at $439,846 (October 2025), an unremarkable 1.3% year-on-year increase. However, the average home value is currently $360,727 as reported by Houzeo.com and Yahoo!
There is no doubt that the housing market is shifting, and this trend is likely to continue into 2026. The shift has resulted in a spike in inventory (up 7.4% year-on-year), and coupled with a reduced average mortgage rate (6.3% average), the market has clearly shifted in favor of buyers. But trends are region-specific, with parts of Florida showing a weakening of the property market while many regions in the NE and Midwest are strengthening.
The bigger picture is that market conditions are putting unusual pressure on buyers to think more strategically about financing choices. It's not simply about chasing a lower rate; it's about choosing a structure that actually supports long-term affordability when so many variables are in flux. Different demographics are fortunate to have access to beneficial loan programs that facilitate homeownership.
That's why options like a VA loan remain such a reliable path for specific buyers (veterans, service members, and eligible family members). It cuts through a lot of the noise by offering stability when the broader market feels anything but. People underestimate how much predictability matters when inventory is rising unevenly across states. It's one of the few programs that still feels grounded, even in a rapidly transitioning market.
After the Pandemic-Driven Property Market Boom
Zooming out from the pandemic-driven shortage of housing, it's clear that five years later, the property market is less a seller's market and more a buyer's market. If expectations pan out – that being income growth outpacing home price growth, more affordability is expected in the New Year. It's disingenuous to paint a singular narrative for the entire U.S. housing market. Judging by the performance of regional markets, it's not a homogeneous ecosystem.
Granted, mortgage rates, inflation, and general economic conditions hold true for the country. But each market operates independently, driven by unique conditions. High-demand real estate in metropolitan enclaves like Los Angeles and New York City continues to feel the pinch with more demand than supply in desirable locations. Bugbears for aspiring property owners, particularly in Florida, include high HOA (Homeowners Association) fees, Insurance costs, and Property Taxes. The Florida legislature is expected to take up many of these issues in 2026.
The property market cannot be evaluated on real estate prices alone. Supplementary costs (taxes, dues, and insurance) must be factored into the affordability equation. A classic case in point is golf estate properties, often selling at affordable prices but with extortionate annual membership dues, HOA fees, property taxes, and insurance premiums. However, it's always a challenging prospect for first-time homebuyers. Navigating the complex world of real estate requires due diligence, careful assessment of available options, and budgeting to determine the viability of ownership versus rentals.
Current Housing Market Trends Expected to Continue
- Home Prices - Home prices are projected to edge up by roughly 1% - 2.2% on average. But that headline number hides the reality that several markets will post declines. Each market must be assessed on its merits.
- Price Declines in Specific Cities - Parts of Florida and select Southern and Western hubs are poised for noticeable pullbacks. This is particularly true in cities that overheated during the pandemic run-up. In many parts of Florida, property prices have stabilized.
- Mortgage Rates – Interest rates appear set to settle into the low 6% band, a mild improvement that nudges affordability in the right direction. It is important to highlight that even this rate is historically high and unaffordable for many aspiring homeowners.
- Inventory Levels - More listings are expected to hit the market, giving buyers additional breathing room. This reduces the frantic competition that defined the pandemic years.
- Sales Activity - Resales could climb anywhere between 1.7% and 14%, driven by pent-up demand and marginally better affordability. A caveat is in order, though, since activity still trails pre-pandemic norms.
- Market Normalization - The broader story is a Great Housing Reset — measured, gradual normalization rather than any dramatic upswing. This is how a robust housing market will be evaluated.
- Economic Impact - Local economic conditions will shape outcomes in 2026. Some regions strengthen, others slip, and the national picture remains uneven.
- Government Policies - New affordability-focused policies may surface as lawmakers respond to widening gaps in access and the escalating barriers facing would-be homeowners. The Trump Administration plans for 50-year mortgages and ways to make homeownership easier are in the works.
Heading into 2026, it's evident that the property market is undergoing structural changes. Supply has finally caught up in many regions, and prices are cooling in previously overheated markets like Florida, California, and Texas. Demand hasn't disappeared, but it's no longer overwhelming available inventory.
With income growth trending upward and rates edging lower, homeownership is positioned to expand through 2026. That's a net positive for everyday buyers, veterans, and first-time homeowners who've spent years navigating an imbalanced market.
One must exercise caution when drawing general conclusions from regional markets since there are many intricacies within each sub-market to consider.
