Real Estate Market Update

January delivered a slower start than many hoped for, but early indicators point to improving conditions as we move toward spring.

Sales activity cooled, and inventory remained tight across many markets. While winter weather likely contributed, improving affordability trends and mortgage rates dipping below 6% could help fuel a stronger spring season.

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

February Housing Market Trends

January proved to be a rough start to the year. The good news is that all signs point to a potentially better spring homebuying season!

Existing Homes

Month-over-month and year-over-year sales fell at the start of 2026. Existing home sales in January saw a 8.4% decrease, and a 4.4% decrease year-over-year, according to the National Association of Realtors (NAR). The median existing-home price was $396,800.

NAR Chief Economist Dr. Lawrence Yun commented that while the decrease in sales is disappointing, below-normal temperatures and above-normal precipitation in January made it harder than usual. 

The good news is that affordability improved due to wage gains outpacing home price growth and lower mortgage rates. The downside is that supply has not kept pace.

New Construction Homes

Builder sentiment fell in January. While there are affordability concerns with the lower and mid-range sections, the upper end of the housing market is doing well, according to the National Association of Home Builders (NAHB).

The latest data from the (NAHB)/Wells Fargo Housing Market Index (HMI) also found that 40% of builders reported cutting prices in January. This is also the third consecutive month the share has been 40% or higher since May 2020. 

The average price reduction was 6%, and the use of sales incentives was 65%.

Housing Inventory

In January, there was a 0.8% decrease in unsold inventory, bringing the supply of existing homes to 3.7 months, NAR reported. This is up from 3.5 months in December and one year ago.

Zonda found that there were 2.1 quick move-ins (QMI) per community nationally of new construction homes in January. This is up from 7.9%; however, that figure has trended downward for four consecutive months.

Mortgage Rates

Mortgage rates dropped to below 6% for the first time in 3.5 years. As of February 26, 2026, the interest rate on a 30-year fixed-rate mortgage was 5.98%, according to Freddie Mac’s Primary Mortgage Market Survey. Freddie Mac anticipates more potential buyers in the market for the spring homebuying season thanks to these lower rates.

DMV Housing Market Update

According to the Northern Virginia Association of Realtors (NVAR), the Northern Virginia real estate market is showing early signs of adjustment. Inventory is increasing, prices are beginning to ease, and homes are taking longer to sell.

In Northern Virginia, home sales were down 5.6% compared to January 2025, which was a sharper decline than the national figures. NVAR noted that this suggests that higher price points locally may be making buyers more sensitive in terms of affordability.

The median sold price in Northern Virginia was $675,000, down 1.5% from a year ago, and homes averaged 42 days on market, a 35.5% increase compared to last January. Inventory climbed to 1.11 months, up 19.9% from last year.

The DMV was also impacted by January’s winter storms, likely causing a delay in buyer activity and extending timelines for many listings.

NVAR CEO Ryan McLaughlin pointed out that Northern Virginia is “clearly transitioning,’ due to inventory gains and more balanced conditions, but at just over one month of supply, the region is still far from equilibrium.

Housing Market ‘Ripe for Buyers’

In a recent interview, Robert Dietz, chief economist at the NAHB, said that while 2025 was a disappointing year in the new-home market, there have already been some modest improvements in 2026.

Reduced interest rates have helped smaller, private builders who rely on bank loans to purchase land, materials, and pay workers. These savings are typically passed along to home buyers and renters.

The NAHB anticipates a 1% increase in single-family homebuilding and a 1% increase in new-home sales. Many builders are also cutting prices and offering incentives, one of the most common being mortgage rate buydowns.

Dietz also explained that right now, the median resale home is more expensive than the median newly built home. Right now, the only long-term solution to housing affordability, according to Dietz, is to “build our way out.” 

In other words, build more single-family homes to increase supply and help ease upward pressure on prices.

The new-home market isn’t the only market favoring buyers in 2026. 

According to Realtor.com’s Weekly Housing Trends Report, the housing market is heading towards one that’s “ripe for buyers.”

Active inventory is up from last year, although not improving as rapidly as initially hoped. Another good sign is that the median home spends less time on the market, although a bit longer than it did last year.

Slower home price growth may signal the price correction many buyers have been waiting for.

Realtor.com’s economists believe that as we approach the spring home buying season, momentum from the positive growth in new listings will be important as the housing market continues to recover.

Looking Ahead to the Spring Season

The February data suggests a market that’s adjusting rather than accelerating.

Sales are down, but affordability has improved, largely due to lower mortgage rates, builder price cuts and incentives. Inventory is rising, even if slowly.

Mortgage rates dipping below 6% could finally be the catalyst that brings more buyers back into the market this spring. If new listings continue to grow and price appreciation remains measured, buyers may see more negotiating power than they’ve had in recent years.

Spring will be the real test. For now, the data points to a market in transition!

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