As 2026 begins, changes are filtering through the U.S. housing market. Mortgage rates are lower than they were this time last year. Home values are decreasing in certain areas, sellers are reducing their listing prices, and houses are staying on the market for longer. Considering all of the factors that exist right now in the housing market — is it a good time to buy a house?
Good news for anyone who wants to buy a house soon: There are positive signs of improvement. According to the Realtor.com November 2025 Housing Market Trends Report, there are indications that the real estate market has become more balanced since 2024.
More homes are on the market overall. Active listings have increased by 12.6% since November 2024.
However, we are starting to see “delistings,” or sellers pulling their homes off the market. Active listings actually decreased by 2.5% since October. Many sellers want to sell their home for a price that the typical home buyer simply cannot afford right now.
Still, the annual increase in inventory means you have more options than this time last year.
In November, 18% of listings featured price reductions. The Northeast was the region with the fewest price cuts, and the South experienced the most.
The median number of days homes were on the market rose to 64 days in November. That’s three days longer than this time last year and two more days than in October.
The longer listings remain active, the more choice buyers have. The increased time on the market is likely triggering those seller discounts we mentioned above too.
According to Freddie Mac, the highest rate over the same period has been 7.04%. They’ve been hovering in the low-to-mid-6% range lately, and the average 30-year fixed rate is currently 6.22%. While that may still feel high compared to 2020 and 2021 rates, at least interest rates are currently staying well below 6.5%.
The Federal Reserve cut the federal funds rate again at its meeting on Dec. 10 — but if history is any indication, this move probably won’t push home loan rates down. However, mortgage rates could decrease if factors surrounding tariffs and politics lead to a lower 10-year Treasury yield. Mortgage rates tend to follow the 10-year yield more closely than the fed funds rate.
To navigate today’s mortgage rates, consider:
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More than half of home loan borrowers (56%) only get a preapproval from one lender. That reduces your bargaining power and limits the opportunity to find a better interest rate from a more business-hungry lender. Zillow research says that 45% of first-time home buyers who shopped with multiple mortgage lenders got a better rate.
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Putting down a larger down payment can earn you a better mortgage rate.
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Some buyers get below-market mortgage rates by negotiating a buydown or special financing from a seller or builder.
Take action: Use a mortgage calculator to determine the monthly payment you can afford. You can then learn the home price, down payment, credit score, type of home loan, and mortgage interest rate to meet your home-buying goal.
New home construction remains a persistent issue. Builders remain cautious, with continuing concerns about the impact of tariffs and the rising costs of materials. National Association of Home Builders Chief Economist Robert Dietz believes that a weaker labor market and financial pressure on consumers will lead to weak sales for the construction market.
“After a decline for single-family housing starts in 2025, NAHB is forecasting a slight gain in 2026 as builders continue to report future sales conditions in marginally positive territory,” Dietz said in a release.
Zillow, on the other hand, predicts the slowest year for single-family construction since 2019, because of a large inventory of new homes already built, with more underway.
However, slightly lower mortgage rates and growing builder incentives could spark activity next year. The NAHB reported 41% of builders cut prices in November, a post-COVID record high.
Take action: If the area you love is too expensive, consider expanding your search to more affordable areas near your favorite neighborhood.
To answer the question of whether it’s a good time to buy a house for you personally, you must look beyond broad market forces. Buying a home is more than considering macroeconomic factors. It’s an important life decision based on your personal and financial situation.
When you rent, the decision to move is broken down into six months, or a year or two at a time, as your lease renews. But every dollar-related detail makes a home purchase a medium- to long-term investment. Buying a house includes various costs: the down payment, closing costs, and financing fees, moving expenses, property taxes, and perhaps selling the house you’re in now.
Homeownership requires a long timeline. How you make a living, your friends, family, and even community amenities all come into play.
A primary consideration: your job. Will it require a location change anytime soon, or can you live where you please? Is your income steady and all but assured?
One of the significant factors that will qualify you for a home loan is your credit score. It’s important to know it before applying for a mortgage.
For the most common loan, a conventional mortgage not backed by a government agency, you generally need a FICO Score of 620 or better.
FHA loans can allow a credit score as low as 580 with 3.5% down. VA loans issued to qualified military service members and veterans don’t officially have a minimum credit score, though some lenders will require a FICO Score of 620.
Of course, minimum credit scores are the entry-level to qualifying; the higher your score, the better the loan terms you’ll be offered. Most importantly, that can mean you’ll pay a lower annual percentage rate over the life of the loan. You may also have more room to negotiate on fees.
As a benchmark to where you stand, the median credit score on a new mortgage in the second quarter of 2024 was 772, according to the New York Federal Reserve.
A primary financial metric lenders will use to determine your creditworthiness is your debt-to-income ratio.
Fannie Mae, a government-sponsored entity that provides liquidity to the home loan market, looks for a maximum total DTI ratio of 36% of “the borrower’s stable monthly income.” Exceptions can allow for total DTIs up to 50%, but it’s usually best to avoid working on the edges of qualification if you can.
You can calculate your DTI by dividing your total recurring monthly debt by your gross (before taxes and other deductions) monthly income.
Include debt such as monthly mortgage payments (or rent), real estate taxes, and homeowners insurance. Also, include any car payments, student loans, and the minimum monthly payment due on credit cards. Remember any personal loan payments, child support, or alimony.
Do not include debt such as monthly utilities — like electricity, water, garbage, or gas bills — or car insurance, television streaming subscriptions, or cell phone bills. You can also exclude health insurance costs and miscellaneous expenses such as groceries or entertainment.
Having a cash cushion in the form of emergency savings shows lenders that you are prepared for the unexpected. Of course, that savings account should also include …
A large chunk of your savings account should be dedicated to the down payment. A minimum down payment of 3% is required to qualify for a conventional loan targeted at first-time home buyers — or ideally, 20% to avoid private mortgage insurance. Yes, zero-down options exist if you are eligible for a VA- or USDA-backed loan.
According to Realtor.com, the median down payment in the fourth quarter of 2024 was 14.4%.
Buy smart and shop a lot. Relentlessly shop interest rates and mortgage lenders for the best loan offers and justified fees. Get a written preapproval from your lender, then shop for a house you can love and can afford. Your home buying competition is.
According to Zillow, when it comes to first-time buyers versus repeat buyers, first-timers are more likely to reach out to at least three lenders and three real estate agents.
Mortgage rates tend to fall during economic downturns, so a recession would definitely qualify as a time when rates would likely drop. However, lower rates generally increase demand as more buyers enter the market, so house prices would likely rise. Buying a house at a time when both mortgage rates and home prices are favorable is a challenge. You probably shouldn’t try to time the housing market by waiting for a recession. Buy when it makes sense for you personally.
There are pros and cons to buying in today’s housing market. For example, home prices are cooling off, but sales prices remain unaffordable for individuals who have experienced recent job losses or furloughs. Deciding whether it’s a “smart” time to buy a house is less about timing the real estate market and more about evaluating your financial situation. Can you comfortably afford the down payment, closing costs, and monthly mortgage payment? Do you expect to stay in the home long enough to recoup the money you pay up front? Then it could be a smart time for you to buy a home.
Locking in a mortgage rate is a short-term decision, generally lasting only 30 to 60 days — sometimes up to six months. There’s little reason to agonize over it. Be comfortable with the rate on your Loan Estimate and start packing boxes.
Homes become more affordable as your income and savings grow. Ask any homeowner: Buying that first house was a stretch. The monthly payment loomed large. As months and years go by, it becomes less of an issue. Then, as home prices continue to rise, you’re on the right side of the equation: The growing home equity builds your net worth.
Laura Grace Tarpley edited this article.
