Real Estate Market Update

The housing market is kicking off 2026 with more momentum than we saw for much of last year.

Mortgage rates have continued to slowly come down, affordability has improved slightly, and both buyers and sellers are beginning to re-enter the market after a cautious end to 2025.

While challenges remain, especially around inventory and affordability, January’s data points to a market that’s still finding its balance. 

Here’s a look at what happened in the January 2026 housing market.

January Housing Market Trends

The 2026 real estate market is starting off strong! Here’s a closer look at what happened nationwide.

Existing Homes

According to the National Association of Realtors (NAR), existing home sales increased by 5.1% in December, and by 1.4% year-over-year. The median existing-home price for all housing types was $405,400, up 0.4% from one year ago.

According to NAR Chief Economist Lawrence Yun, 2025 was another challenging year for homebuyers, but in the fourth quarter, conditions began to improve as mortgage rates fell and home price growth slowed.

December home sales were the strongest in nearly three years!

New Construction Homes

Builder sentiment declined as we entered 2026 due to affordability concerns, according to the National Association of Home Builders (NAHB). Builder confidence dropped by two points in January, and while the upper end of the housing market is holding, the lower and mid-range sections aren’t faring as well.

Around 40% of builders reported cutting prices in January, the same as December, and the average price reduction was 6%, up from 5% the previous month. The use of sales incentives was 65%, marking January the 10th consecutive month with incentives exceeding 60%.

Housing Inventory

Inventory levels are still tight. There were 3.3 months of unsold inventory in December, down from 4.2 months in November but up from 3.2 months in December 2024, NAR reported.

According to Yun, fewer sellers were eager to move, and homeowners are taking their time deciding when to list or delist their homes. More inventory is expected to come into the market in February.

This isn’t unusual. There are typically fewer sellers in the market at this time of the year. We should see these numbers grow as we approach spring.

Mortgage Rates

As of January 29, 2026, the interest rate on a 30-year fixed-rate mortgage was 6.10%, according to Freddie Mac’s Primary Mortgage Market Survey. This is down from 6.15% in last month’s market update, the lowest level in 2025.

Freddie Mac pointed out that lower rates and strong income growth have led to a steady increase in purchase applications compared with last year. The Mortgage Bankers Association (MBA) also reported that housing affordability has improved due to lower monthly mortgage payments. The national median mortgage payment is $102 lower from one year ago.

DMV Housing Market Update

At the end of 2025, the Northern Virginia housing market did see modest gains with improvements in the regional housing supply, price growth, and a more deliberate pace of sales, according to the Northern Virginia Association of Realtors (NVAR).

The median sold price reached $715,000 in December, a 2.1% increase from the previous year, outpacing the national market. December’s inventory also saw improvements, with 1.04 months of supply, up from 0.8 months last year. 

NVAR pointed out that, despite lower inventory levels than national figures, the Northern Virginia region is making measured progress toward balance. 

“Those underlying supply-and-demand dynamics continue to shape local conditions in ways that differ from national averages,” said NVAR CEO Ryan McLaughlin.

Sales activity also increased 5.2% year over year, more than triple the national growth rate. Despite everything, this suggests that buyers and sellers are still finding ways to move forward. Buyers are also taking more time, as the average days on market rose to 35 days, a 29.6% increase from December 2024.

In D.C., inventory increased by 2.9% from the last year, and the median price fell to $549,500, Realtor.com reported. This is an 8% decrease year-over-year. Homes in Washington also lingered on the market for a median of 75 days, giving buyers more time to consider their options and negotiate a favorable deal.

This is a great opportunity for buyers! While sellers face longer selling times, buyers now have a chance to negotiate and take advantage of a market that’s increasingly favorable to homebuyers.

Is Now a Good Time to Refinance?

Today’s mortgage rates are the lowest they’ve been in three years, with the 30-year fixed-rate mortgage averaging around 6%. Should homeowners take advantage of the lower rate environment and refinance?

NBC News senior business correspondent Christine Romans says those who bought a house in the last couple of years at rates 7% or higher will benefit the most from these lower rates.

According to Romans, if you bought a typical $400,000 house with an 8% interest rate, you’re paying around $2,300 every month. But at 6%, it would only be around $1,900. Over a year, that’s a $4,800 savings.

The rule of thumb is that if there’s a 1% difference between your interest rate and the current average, it could make sense. However, even a half-percentage difference can help in certain cases.

Romans recommends talking to a mortgage professional about refinancing if your current interest rate is above 7%. 

It may not be a smart move for everyone, but at least it’s something to consider!

The Risk of Recession Has Fallen

The Federal Reserve decided to hold rates steady in its January meeting, as expected, Redfin reported. This marks the first time since July that the Fed hasn’t cut interest rates.

The Fed has announced that it does not expect to continue rate cuts for the foreseeable future, as it sees no reason to do so.

What does this mean for mortgage rates?

Since no action was taken, we should see any noticeable changes. Refin noted that the Fed’s rate policy is approaching neutral, which is where the Fed typically wants to be when it isn’t trying to stimulate or contract the economy.

In other words, there are no clear signs of a recession, especially when the economy is likely to benefit from tax cuts passed last year.

The risk of higher inflation has also fallen, supporting the Fed’s decision to hold rates where they currently are.

What Comes Next?

January’s data reinforces a theme we’ve been watching closely: the housing market continues to slowly stabilize. Lower mortgage rates, slower price growth, and modest gains in sales activity are helping restore a sense of balance.

For buyers, improved affordability, longer days on market, and more negotiating room, even in some in parts of the DMV, are creating real opportunities. 

For sellers, success in 2026 will likely depend on pricing strategically, understanding local conditions, and adjusting expectations.

There’s no sign of a sudden shift ahead, but that may be a good thing. A steadier market gives both buyers and sellers the chance to make smart decisions, rather than rushed ones. 

As we move closer to spring, activity should continue to build!

Looking to buy or sell in the DC area in 2026? Don’t navigate the complexities of the current housing market alone! Reach out today for expert real estate leadership.