Real Estate Market Update: December 2025

As 2025 comes to a close, the housing market is ending the year in a more stable (though still cautious) position. 

Mortgage rates dipped to their lowest point of the year, sales activity showed modest improvement, and buyers and sellers are adjusting to a slower, more balanced pace.

This isn’t a market defined by sharp swings or sudden shifts. We’re seeing small improvements, especially for homebuyers, which could be the overall theme for 2026!

Here’s a look at what happened in the December 2025 housing market.

December Housing Market Trends

Home sales increased, thanks to a drop in mortgage rates to their lowest level in 2025.

Existing Homes

Existing home sales increased by 0.5% in November, according to the National Association of Realtors (NAR), which was the third consecutive month of increases, thanks to lower mortgage rates. 

The median existing home price for all housing types was $409,200, up 1.2% from last year. However, the typical price of a sold condo was 13.5% lower than that of a single-family home. Wage growth outpaced home price gains, which helped improve housing affordability last month.

New Construction Homes

Builder confidence improved at the end of 2025, but still remains in negative territory, according to the National Association of Home Builders (NAHB). Two-thirds of builders reported offering incentives to get buyers off the fence; however, builders are still dealing with rising material and labor costs.

Data shows that 40% of builders cut prices in December with an average price reduction of 5%. According to NAR and NAHB, there’s a projected 5% increase in new home sales for 2026, National Mortgage Professional reported.

Housing Inventory

There was a 5.9% decrease in unsold inventory from October and up 7.5% from November 2024, bringing the months’ supply to 4.2. NAR pointed out that this stall in inventory is also due to homeowners being in no rush to list their properties during the cold winter months.

Mortgage Rates

In December, mortgage rates dropped to their lowest level in 2025, according to Freddie Mac’s Primary Mortgage Market Survey. We started the year around 7% for a 30-year fixed-rate mortgage, and ended the year at 6.15%. According to Freddie Mac, this is an encouraging sign for potential buyers as we head into the new year.

DC Housing Market Update

According to the Northern Virginia Association of Realtors (NVAR), Northern Virginia’s real estate market is seeing stronger prices, faster inventory growth, and sustained buyer demand heading into the new year.

While there was a 6.6% decline in sales activity, home prices climbed to $740,000 in November, 1 5.7% increase from last year. NVAR noted that this underscores the region’s position as a high-demand, high-value market, even with ongoing affordability challenges.

Inventory still remains low – 1.48 months in November – but it’s still up 41.2% from last year. Homes are also taking longer to sell, but are moving faster than they do nationwide. The average days on market increased 31.8% to 29 days in November.

According to NVAR’s 2026 forecast, the Northern Virginia market will continue to find balance in 2026 with moderate price increases, interest rates around 6%, and higher levels of inventory.

There’s a lot of local variation in the DMV. The strongest local markets right now are in the Northern Virginia suburbs, and weaker activity in the District and Maryland.

In Washington, D.C., BrightMLS reported a 0.8% decrease in sales compared to last year, and newly pending sales were down 4.8% in November. According to Bright Research, cuts to federal government spending, layoffs, and shutdowns have created uncertainty going into 2026.

The U.S. Housing Market Still Has More Sellers Than Buyers

The national housing market continues to lean toward buyers. 

In November, Redfin reported roughly 529,000 more sellers than buyers nationwide, meaning there were about 37% more sellers in the market than buyers. That’s one of the widest gaps seen in more than a decade.

This imbalance gives buyers more leverage in 2026, with more homes to choose from and room to negotiate. At the same time, buyer demand is still muted due to affordability pressures and economic uncertainty, which is keeping overall activity slower than normal.

For buyers, this can translate into more options and flexibility. For sellers, it means pricing and presentation matter more than ever as competition for buyers increases.

Slower activity at this time of the year is still in line with seasonal trends. We should see activity pick up as we head into spring. In a NAR survey released in December, 20% of Realtors said they expect a year-over-year rise in buyer traffic in the next three months.

A More Stabilized Market Going Into 2026

The Mortgage Bankers Association (MBA) recently reinforced its housing market outlook for 2026, and the forecast paints a slow-but-steady picture rather than a dramatic rebound.

According to MBA economists, mortgage rates are unlikely to fall below 6% next year and could even trend toward 6.5% at times, as the Federal Reserve’s rate-cut cycle nears its end.

The MBA expects home price growth to potentially dip slightly into negative territory in late 2026. This signals that price pressures may ease as inventory stays elevated and buyer demand remains modest. 

On the mortgage side, total origination volume is projected to rise modestly. Purchase activity is projected to rise modestly as buyers adjust to today’s rate environment, while refinancing will likely increase only during brief rate dips.

“This forecast becomes more likely as the Federal Reserve Board reaches the end of their cutting cycle next year,” the report mentioned.

Final Thoughts

The housing market is closing out 2025 in a more balanced position than where it started.

Mortgage rates have eased, inventory has improved modestly, and buyers are slowly re-entering the market. At the same time, affordability challenges and economic uncertainty have hampered activity.

As we head into 2026, the data points to a market that’s stabilizing rather than accelerating. Local conditions also play a fairly significant role, especially across the DMV.

Looking to buy or sell in the DC area? Don’t navigate the complexities of the current housing market alone! Reach out today for expert real estate leadership.