January 2026 Housing Market Update: 2025 Real Estate Trends & 2026 Forecast

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As 2025 comes to a close, one thing is clear—the real estate market didn’t just slow down in December, it paused almost entirely. In this January 2026 housing market update, we break down what happened at the end of last year, the biggest real estate trends of 2025, and what buyers, sellers, and investors should expect in 2026.

Whether you’re thinking about buying a home, selling your property, investing in real estate, or simply staying informed about the Northern Virginia housing market, this update will give you clarity and direction for the year ahead.

January 2026 Housing Market Snapshot

The January housing data reflects a typical seasonal slowdown following the holidays, but the numbers tell an important story:

Inventory down 18% month over month
Homes under contract down 16.5%
Closed sales up nearly 12%
Overall inventory down 27% month over month
Months of supply: 1.7 months

This confirms what many experienced firsthand—real estate activity essentially came to a halt in December as fewer sellers listed homes and fewer buyers wrote contracts.

Additional insights:

• Average days on market: 68 days

• Median days on market: 43 days

• List-to-close price ratio: 99.4%

• Average home price: ~$575,000

 Curious how this compares to prior months? Read our previous housing market updates.

The 3 Biggest Real Estate Market Shifts of 2025

 The Market Shifted Toward Buyers

One of the most important real estate trends of 2025 was the return of buyer leverage. For the first time since the 2008 housing crisis, sellers no longer held all the power.

2024 average days on market: 19 days
2025 average days on market: 39 days

Buyers had more time to shop, negotiate, and request concessions. Yet values still rose:

Home appreciation: 2.4%
Inflation: 2.7%

This marked one of the rare periods where appreciation trailed inflation.

Thinking of selling? Learn how pricing strategy matters in our guide: Selling With the 1245 Team.

2026 Home Price Forecast:
In strong markets like Northern Virginia, we expect ~2.5% appreciation—stable and healthy growth.

56% of sellers adjusted their price in 2025, reinforcing the importance of expert guidance.

Housing Affordability Took Center Stage

Affordability became a national conversation. One telling statistic:

Median age of first-time homebuyers: 40 years old

Momentum is building with discussions around:

• Increasing housing supply

• Modernizing mortgage options

• Reducing regulatory barriers

If affordability is a concern, start by learning what your home is worth or explore buying options with our team.

The Industry Adapted to Commission Changes

Despite initial concerns after the NAR settlement, the industry adjusted quickly.

Today’s structure is clearer and more transparent :

• Sellers pay their listing agent

• Buyers negotiate buyer-agent compensation within the offer

Commissions have modestly increased, not decreased—creating clearer expectations and healthier negotiations.

Learn more about our approach on the About the 1245 Team page.

Inventory & Interest Rate Outlook for 2026

Inventory is projected to rise about 10% in 2026. However, listings remain 42% below pre-2020 levels, when interest rates hovered near 3%.

Mortgage Rate Forecast

Rates are expected to land in the high 5% range. Even small rate drops tend to bring sidelined buyers back into the market.

Want to act before competition increases? Connect with us to discuss timing strategies.

What Renters Should Know in 2026

Renters should prepare for continued rent increases.

While renting may feel cheaper month to month, ownership offers long-term benefits:

• Forced savings through principal paydown

• Appreciation

• Tax advantages

Example:
A 2.5% increase on a $600,000 home = $15,000 in equity in one year.

See if owning makes sense for you: Talk to our buying specialists.

Final Thoughts: Preparing for the 2026 Real Estate Market

Affordability challenges remain, but opportunity still exists.

In 2026, we’ll be sharing:

• House hacking strategies

• Partnering on real estate investments

• Leveraging home equity wisely

Stay informed—read more insights on our Real Estate Blog.

Northern Virginia Real Estate Outlook for 2026

2025 was a year of adjustment.
2026 is shaping up to be a year of balance, stability, and smarter decisions.

If you’re considering buying, selling, or investing in Northern Virginia, Fredericksburg, or Maryland, the 1245 Team at Keller Williams Realty is here to help you move forward with confidence.

Hear from past clients: Read Our Client Reviews 
Ready to take the next step? Contact Us Today

Written By: Nate Johnson & Shawn Derrick
The 1245 Team – Keller Williams Realty
(571) 477-1245

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