Homebuyers are starting to see signs of relief, and the momentum could roll into next year.<\/p>\n
While 2025 has been more of a \u201cbalancing year\u201d for the housing market, \u201c2026 will be better for buyers,\u201d Realtor.com senior economist Joel Berner told NBC News. <\/p>\n
This shift in the market is in part due to a drop in mortgage rates and softening home price growth, he said. <\/p>\n
The 30-year fixed-rate mortgage is currently 6.18%, according to Freddie Mac<\/a>, a notable decline compared to the high rate of 7% from earlier this year. Although current rates are still significantly higher than those buyers experienced during the pandemic, Berner said he\u2019s seen a pickup in activity.<\/p>\n He also said buyers won\u2019t see rates as low as 3% or 4% next year, but a drop below 6% is \u201cdefinitely in the realm of possibility.\u201d Buyers haven\u2019t seen rates below 6% since September 2022, according to Freddie Mac data.<\/p>\n Even with sliding rates, however, potential first-time buyers are still struggling to afford a home. And as prices have picked up over the years, so has the median age to buy one<\/a>. According to a November report<\/a> from the National Association of Realtors, the median age for first-time buyers is 40, an \u201call-time high.\u201d NBC News\u2019 Home Buyer Index<\/a> also shows that conditions remain difficult, even if the gauge is down from recent highs. <\/p>\n Yet sales are picking up, and home price growth has been slowing down, too. <\/p>\n The S&P Cotality Case-Shiller U.S. National Home Price Index<\/a>, which tracks home prices across the country, on Tuesday reported a 1.4% annual gain for October. This nearly matches gains from September\u2019s index, indicating stagnant growth in home prices. <\/p>\n \u201cWould-be buyers are facing the highest borrowing costs in decades, and that affordability squeeze has curbed demand enough to erode price momentum across most of the country,\u201d Nicholas Godec, head of fixed income tradables and commodities at S&P Dow Jones Indices, said in a release. <\/p>\n Even with dropping mortgage rates and cooling home price growth, an uncertain economy marked by a shaky job market and stubborn inflation could scare off potential buyers. <\/p>\n \u201cEconomic uncertainty is the big thing that\u2019s keeping buyers out of the market,\u201d Berner said. \u201cIt comes down to how confident people are feeling in their finances that determines whether they want to buy a home.\u201d <\/p>\n If the labor market continues to put up \u201csome weak numbers,\u201d he said then that could have a \u201clarger impact than the market conditions moving positively.\u201d However, Berner said he doesn\u2019t necessarily project this will happen. <\/p>\n Regardless of larger concerns around the economy and job market, buyers are already showing a pick up in activity. <\/p>\n November\u2019s pending home sales data showed a 3.3% increase from October, as well as a 2.6% year-over-year jump, according to the National Association of Realtors Pending Home Sales Report<\/a>. NAR\u2019s pending home sales index measures activity of signed housing contracts, which can be used as a gauge of buyer interest and movement in the housing market. <\/p>\n \u201cHomebuyer momentum is building,\u201d NAR\u2019s chief economist, Lawrence Yun, said in a release. \u201cThe data shows the strongest performance of the year after accounting for seasonal factors, and the best performance in nearly three years, dating back to February 2023.\u201d <\/p>\n More than 20% of Realtors said in a NAR survey<\/a> released in December that they expect a year-over-year rise in buyer traffic in the next three months. <\/p>\n Yet while Realtor confidence is growing, confidence among homebuilders is still low despite a small uptick in December. <\/p>\n