The growth of housing inventory has slowed down from a significant 33% year-over-year in mid-2025 to a more modest 10.0% today. This decrease signals the end of the supply shortage era and the beginning of a market where pricing power will be influenced by factors such as demand strength, interest rates, and buyer behavior, rather than scarcity alone.
HousingWire Lead Analyst Logan Mohtashami recently mentioned, “Year-over-year housing inventory growth has now dropped to single digits, from 33% at one point last year to 9.99%. As we step into 2026, we are witnessing another eventful week in the housing market, with headlines ranging from Trump’s announcement of a ban on Wall Street investors purchasing single-family homes to directing the GSEs to invest in mortgage-backed securities.”
With changing rate dynamics and increasing policy actions, 2026 is shaping up to be a year characterized by normalization rather than scarcity.
Demand-driven pricing takes over as the main narrative
In this market, professionals who can accurately gauge demand in real time have the upper hand. Pricing is becoming more sensitive to interest rates, seasonal patterns are reemerging, and transaction volumes are thinner. This emphasizes the importance of strategic decision-making, timely actions, and localized insights over just having access to listings.
Inventory growth slows down but normalization strengthens
While inventory has increased by 10% year over year, the rate of growth has significantly slowed down compared to the highs of 2025. Seasonal trends are making a comeback as well. After a continuous rise throughout 2025, inventory declined between Jan. 2-9, indicating a more predictable winter bottom and spring build.
“We aim for the seasonal low point to occur in February,” noted Mohtashami. “More supply leads to slower price growth and increased affordability.” A February low point would bring back a normal listing cycle that agents, lenders, and builders depend on to plan for spring activities.
New listings continue to be the bottleneck for 2026
During the week ending Jan. 9, new listings totaled 39,007, a 12.6% decrease compared to the previous year. This decline poses a significant challenge as the market heads into the spring selling season.
“In 2026, the goal for new listings is not only to return to 80,000 new listings per week during peak periods but to surpass 80,000 in some weeks,” Mohtashami emphasized. Without this acceleration, inventory growth will be limited, and transaction volume may remain below historical averages.
Pricing discovery replaces frantic bidding
The median days on market currently stands at 91, reflecting a more measured sales pace compared to previous cycles. 34.7% of homes have experienced price cuts, while only 2.4% saw an increase. These trends indicate a pricing environment driven by negotiation and sensitivity to rates, rather than urgency or bidding wars.
This week, pending sales reached 39,841, a 2.4% decrease from the same period in 2025. Coupled with lower new listings, this suggests a market operating at equilibrium with reduced transaction levels.
Rates influence buyer decision-making and stimulate demand
With mortgage rates hovering closer to 6% rather than 7%, buyer calculations, seller perspectives, and move-up decisions all see positive impacts. “Unlike the start of 2025, when mortgage rates eventually peaked at 7.26%, we are now near 6% – with the Trump administration focused on revitalizing the housing market,” explained Mohtashami.
The difference between a 6% and 7% rate is significant in terms of behavior. It affects purchasing power, timing for moving up, eligibility for refinancing, and investor participation. It also creates competition at specific price points without reigniting the bidding frenzy seen in previous years.
How to utilize this information
Agents and brokerages
- Utilize normalized seasonality and rate-sensitive demand to strategically time listings for the upcoming spring season.
- Educate buyers that pricing trends are shifting towards negotiation rather than urgency.
Lenders and mortgage operators
- Align your rate messaging based on demand elasticity, not just affordability.
- Use pending sales data to plan your staffing and manage your loan pipeline effectively.
Builders and developers
- Anticipate increased competition with resale properties as new listings recover.
- Offer incentives that cater to buyers comparing new construction versus existing inventory.
Investors and portfolios
- View price reductions as part of the standard price discovery process rather than distress signals.
- Consider policy risks alongside rate and cap rate dynamics when making investment decisions.
The 2026 market embraces moderation and equilibrium
In Mohtashami’s view, “2026 will be the first year in a long time with relatively normal spreads and a system that has already seen many rate adjustments.” After experiencing extremes in demand followed by supply, the market is transitioning into a more balanced phase where transaction decisions are influenced by timing, rates, negotiation strategies, and localized market dynamics rather than scarcity alone.
All data pertains to single-family homes on a national scale. Weekly data reflects snapshots taken on Fridays as of Jan. 9, 2026. This story was sourced using HW Data by HousingWire. To stay informed about your local market, generate housing market reports. For enterprise clients seeking to license comprehensive market data, visit HW Data.