Housing is entering 2026 in a place that feels familiar and different at the same time. Inventory is still constrained compared to history, affordability remains a challenge, and mortgage rates continue to influence what buyers can do. But after a sluggish start to 2025, the market is showing signs of stabilization.

That is the core theme of Anchor Loans’ January 2026 U.S. Housing Monitor: inventory has begun to ease and absorption has improved, suggesting stronger buyer activity and better alignment between list pricing and what today’s consumer can afford.

For real estate investors, builders, developers, and brokers, the shift matters because it changes how risk shows up. In a market with improving absorption, resale liquidity can strengthen. In a market with supply still tight, the right product can stand out. And in a market where affordability is still stretched, pricing discipline becomes even more important.

A Market That’s Still Tight, But Starting to Move More Smoothly

The most encouraging development heading into 2026 is the improving balance between supply and demand. MLS inventory remains constrained, but after rising earlier in 2025, inventory listed on the MLS started to decline. At the same time, absorption improved.

Absorption is one of the most practical indicators for housing professionals because it reflects how quickly the market is clearing available inventory. When absorption improves, it often means buyer demand is becoming more effective at meeting supply, and the market can operate with fewer disruptions.

For investors focused on renovation and resale, this matters because absorption is closely tied to exit conditions. A market where absorption improves tends to be a market where appropriately renovated homes can move with less discounting and less time sitting on the market. For builders, it can signal a more orderly environment for spec and quick-delivery homes.

Home Prices Are Moderating, Which Changes the Path to Returns

Another defining feature of the 2026 housing market is moderation in home price growth. National home prices have been flat over the past year, and the growth rate has turned negative over the last five months.

That does not necessarily mean housing is weak. It means the market is transitioning out of an appreciation-driven environment and into a more execution-driven one.

For real estate investors, this shift changes what makes a deal successful. In a flat price environment, there is less room for error. The purchase basis matters more. Renovation budgets matter more. Timelines matter more. The market is less likely to cover mistakes through rapid appreciation.

The underlying price datasets used in the housing market are publicly available through the Zillow Research Data portal, which includes the Zillow Home Value Index and related metrics.

The U.S. Is Not One Market in 2026

One of the clearest themes in today’s housing environment is regional divergence. Price performance has been stronger in the Northeast and Midwest, while parts of Texas and Florida have been weaker.

Metro-level trends reinforce the same story. Some major markets show stronger price momentum, while others have softened.

This is an important reminder for anyone underwriting residential deals. National headlines are not enough. In 2026, outcomes are increasingly shaped by local supply, local affordability, and local buyer behavior.

For brokers and capital partners, this is also why market insight matters. The financing conversation is different in a market with tight supply and strong absorption than it is in a market where inventory is elevated and buyers have more leverage.

Affordability Remains the Biggest Constraint on Housing

Even with moderating home prices, affordability is still stretched. Median U.S. mortgage principal and interest payments have doubled since 2021, and affordability indices remain challenging when factoring in prices, incomes, and mortgage rates.

This is one of the most important realities for real estate investors and builders to understand going into 2026.

Affordability shapes the buyer pool. It shapes what price points have the deepest demand. It shapes how long homes sit on the market. And it shapes how much negotiating leverage buyers have, even in markets where supply is limited.

This is also why the best-performing projects are often the ones that align renovation decisions with what buyers will pay for, rather than simply aiming for the highest finishes possible.

Mortgage Rates Still Matter, Even When Inventory is Tight

Mortgage rates remain a defining influence on the housing market. Rates have moved slightly down year to date, though they have moved up recently due to strong economic data and policy uncertainty.

The relationship between mortgage rates and the 10-year Treasury rate is also important because spreads can influence where mortgage rates go next. The monitor highlights that mortgage rates may have room to decline going forward if mortgage-versus-Treasury spreads normalize.

For housing professionals, rate movement is not just an economic story. It is a demand story. Even small changes in rates can influence buyer qualification, buyer confidence, and overall resale liquidity.

Demand Has Not Disappeared

A common misconception in the market is that high rates automatically mean demand disappears. But demand metrics show resilience.

Days-on-market for sold homes remains below pre-COVID levels, and the share of homes selling above list price remains above pre-COVID levels.

This reinforces a key reality for 2026. Buyers are still active. They are just more selective, more payment-focused, and more sensitive to price.

The broader inventory and demand metrics used in the housing industry can be explored through the Redfin Data Center, which provides downloadable housing market datasets.

Mortgage Rate Lock-In Is Still a Major Supply Driver

If housing supply feels unusually tight, mortgage rate lock-in is a major reason. Existing home sales remain below pre-COVID levels, and a large share of homeowners hold low mortgage note rates, which inhibits turnover.

This dynamic is one of the most important structural factors in the U.S. housing market today. When homeowners are financially incentivized to stay put, fewer homes hit the market. That keeps resale inventory limited, even when affordability is challenging.

For investors, this matters because limited turnover can create demand for renovated homes and new construction in the neighborhoods buyers want most.

The U.S. Housing Supply Problem Is Still Structural

Even beyond lock-in, supply remains constrained because construction has not been sufficient for years. Single-family housing starts remaining below historically normal levels, and the U.S. is undersupplied by several million units relative to core demand.

This is one of the most important long-term fundamentals supporting housing. When supply is structurally limited, the market can remain resilient even through periods of affordability pressure.

Construction constraints are also not evenly distributed. Homebuilding has been particularly limited in the Northeast and California, contributing to tighter supply in many of those markets.

Multifamily Is Slowing, and That Matters for the Housing Ecosystem

The multifamily construction pipeline is also beginning to contract. Multifamily starts have moved down over the past year, and the number of multifamily units under construction is starting to decline.

This matters because housing is an ecosystem. When multifamily supply slows, it can influence rental availability and the overall balance of housing options, especially in markets where household formation remains strong.

Builder and Remodeling Trends Show a Market That’s Cautious, Not Collapsing

Builder sentiment remains cautious, with sentiment indices below 50 indicating more hesitation than optimism. Confidence is strongest in the Northeast and Midwest.

At the same time, the remodeling outlook remains constructive. The U.S. housing stock continues to age, creating ongoing need for rehabilitation and modernization, and remodeling sentiment remains favorable.

For investors focused on renovation, this is a meaningful long-term tailwind. Aging housing stock creates durable demand for updated, move-in-ready homes, even when the market is not defined by rapid appreciation.

What This Means Going Into 2026

The January 2026 data points to a housing market that remains constrained but is becoming more orderly. Inventory is still tight, affordability remains stretched, and mortgage rate lock-in continues to limit turnover. At the same time, absorption is improving, demand metrics remain resilient, and long-term undersupply continues to support housing fundamentals.

For investors, builders, developers, and brokers, 2026 is shaping up to be a year where discipline matters. It is a market that rewards realistic pricing, market-specific strategy, and a strong understanding of what today’s buyer can afford.

To read the full January 2026 U.S. Housing Monitor, visit: anchorloans.com/resources

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