Early 2026 Housing Market Shows Cautious Buyers and Motivated Sellers With Hope on the Horizon

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The housing market in early 2026 is telling an interesting story—one of patience, adjustment, and cautious optimism. While the pace of sales has slowed considerably, there are encouraging signs that both buyers and sellers are finding their footing after years of turbulence.

Slower Sales Activity Creates Buyer Opportunities

Homes are taking longer to sell than we've seen in years. The typical U.S. home that sold in January spent 64 days on the market before going under contract, the longest span in six years and roughly a week longer than a year earlier. Additionally, pending home sales fell 3.3% year over year, consistent with recent trends.

This slowdown isn't necessarily bad news for everyone. As market momentum shifts, buyers who remain active are discovering they have more negotiating leverage than they've enjoyed in years. Home sellers are outnumbering buyers by a record gap, creating a dynamic where well-positioned buyers can often secure favorable terms.

Housing Costs Remain High but Show Signs of Improvement

Many potential buyers are still sitting on the sidelines, and it's easy to understand why. The economy continues to present uncertainties, with concerns about job security affecting major purchase decisions. The weekly average mortgage rate of 6.1% is near its lowest level in three years, but still double pandemic era lows. Meanwhile, the median home-sale price stands at $379,950, up 1.2% from a year ago.

However, the trend is moving in the right direction for affordability. The median monthly mortgage payment is $2,559, down nearly 5% year over year, and wages are up roughly 4%. These incremental improvements suggest that homeownership is slowly becoming more accessible for qualified buyers.

More Inventory Entering the Market

On the supply side, we're seeing positive momentum. New listings rose 1.1% year over year, marking the third straight week of increases after two straight months of declines. This uptick signals that more homeowners are accepting current market realities and deciding to move forward with their selling plans.

Real Estate Professionals See Reasons for Optimism

Agents on the ground are reporting early signs of market stabilization. Monica DiSchiano, a Redfin Premier agent in Austin—currently home to the slowest housing market in the country—shared her perspective: "The local market is slowly returning to stability. January was pretty busy on the selling side, largely because homeowners have finally come to terms with slower demand and lower sale prices than we were seeing during the pandemic buying boom. And house hunters who had disappeared are trickling back–but they're picky and they want perfection if they're shelling out for a 6%-plus mortgage rate."

Ben Ambroch, a Redfin Premier agent in Milwaukee, where home-sale prices are rising more than anywhere else in the country, echoed similar sentiments about 2026 becoming more balanced: "With each passing month I see more sellers willing to forgo record-low rates and accept that it's time to move," he said. "That's leading to more inventory, which is helping attract buyers. I'm seeing a steady stream of house hunters touring homes, though they are taking their time, requesting inspections, and negotiating with sellers."

Understanding the Current Market Climate

The share of homes off the market in two weeks has declined to 27.2% from 28%, and the share of homes sold above list price stands at 19.2%, down slightly from 19% a year ago. The average sale-to-list price ratio is 97.7%, down from 98%. These metrics paint a picture of a market that's shifting toward better balance between buyers and sellers.

With months of supply at 5.4—slightly above the balanced market range of 4 to 5 months—we're seeing conditions normalize after years of extreme seller favorability.

What This Means for Orange County

While these national trends provide important context, local market conditions can vary significantly. Orange County's real estate landscape has its own unique characteristics, driven by our desirable coastal location, strong job market, and quality of life advantages.

Whether you're a buyer who's been waiting for the right moment to enter the market or a seller wondering if now is the time to list, understanding these broader trends can help inform your decision-making process. The market is certainly more nuanced than during the frenzy of recent years, which means working with an experienced local professional is more important than ever.

Bottomline

The housing market is experiencing what many economists have called the "Great Housing Reset"—a gradual return to more sustainable, balanced conditions. While transaction volumes remain slower than peak years, the combination of improving affordability, increasing inventory, and motivated buyers and sellers suggests that 2026 could mark an important turning point.

If you're considering making a move in Orange County—whether buying your dream home or selling to pursue your next chapter—now is an excellent time to have a conversation about your specific situation and goals. Market conditions are creating opportunities for both buyers and sellers who approach decisions strategically and work with knowledgeable local guidance. Let's connect to discuss how current market dynamics align with your real estate objectives and explore the possibilities that 2026 may hold for you.

Reference: Anderson, D. (2026, February 5). 2026 housing market mood: Buyers are cautious, sellers are showing up, and agents see signs of busier spring ahead. Redfin.