The U.S. housing market is undergoing what some analysts are calling a "Great Reset"—a fundamental shift in dynamics that is finally providing relief to buyers who have been priced out for years. Home prices have turned negative on a year-over-year basis for the first time since 2023, and several major markets are experiencing price declines of 5-10%.

The Price Correction Takes Hold

After years of seemingly unstoppable appreciation, the housing market saw a significant deceleration in price growth throughout 2025. Home price increases slowed from 3.4% annually in January to just 1.1% by October, according to the latest data. More recently, prices have actually begun to decline, with national figures down 1.4% over the past three months alone.

The correction is most pronounced in markets that experienced the sharpest pandemic-era gains:

  • Austin, Texas: Prices down 10% year-over-year
  • Denver, Colorado: Down 5%
  • Tampa, Florida: Down 4%
  • Houston, Texas: Down 4%
  • Atlanta, Georgia: Down 3%
  • Phoenix, Arizona: Down 3%

"A modest improvement in housing affordability could bring some homebuyers off the sidelines in 2026. But the housing market is likely to remain in buyer's market territory for the foreseeable future."

— Asad Khan, Senior Economist, Redfin

Inventory Returns

Perhaps the most significant change in market dynamics is the return of housing inventory. For the first time since the end of 2019, there are more than one million active listings nationally. This increase in supply has shifted bargaining power toward buyers in many markets.

Austin leads the nation with what analysts describe as the strongest buyer's market, with 114% more sellers than buyers as of November. Other former pandemic hotspots are experiencing similar shifts, as sellers who delayed listing during the rate-shock period of 2022-2024 finally bring properties to market.

Mortgage Rate Stabilization

Adding to the improved conditions for buyers, mortgage rates have stabilized in a relatively narrow range. The 30-year fixed-rate mortgage averaged 6.18% this week—just slightly above the lowest level of 2025 seen in late October. While rates remain well above the sub-3% levels of the pandemic era, they have stopped rising, removing a key source of uncertainty for buyers.

Looking ahead, the average forecast among major research firms projects rates of approximately 6.18% for 2026—essentially flat from current levels. This stability, combined with moderating prices, is expected to gradually improve affordability.

The 2026 Outlook

Major real estate firms are projecting modest improvements in market conditions for 2026:

  • Realtor.com: Expects inventory to continue rising and mortgage rates to fall slightly to about 6.3%, making the market "slightly more favorable for buyers."
  • Redfin: Has dubbed 2026 "The Great Housing Reset," anticipating a more balanced market.
  • Fannie Mae: Projects moderate housing market growth with home sales increasing approximately 2% year-over-year.

What This Means for Buyers

For prospective homebuyers who have been waiting on the sidelines, the improved conditions may present opportunities—though expectations should be tempered:

  • More negotiating power: With inventory rising, buyers can be more selective and less likely to face bidding wars.
  • Price cuts are common: Many listings are seeing price reductions, particularly in previously overheated markets.
  • Affordability remains challenged: Despite improvements, housing costs remain historically high relative to incomes.

What This Means for Sellers

For homeowners considering selling, the market dynamics suggest:

  • Pricing realistically matters: Overpriced homes are sitting on market longer; accurate pricing from the start is essential.
  • Competition is returning: With more inventory, sellers face more competition for buyer attention.
  • Location still matters: Desirable neighborhoods with good schools continue to command premiums even in a softer market.

The Wealth Effect

The housing market's shift has broader economic implications. The total value of the U.S. residential housing stock reached a record $48.6 trillion in the second quarter of 2025, having created $18 trillion in residential housing wealth since the start of the decade. A sustained price decline could affect consumer confidence and spending as homeowners feel less wealthy.

For now, the reset appears to be orderly rather than disruptive—a normalization rather than a crash. But the era of guaranteed double-digit annual appreciation appears to be over, at least for the foreseeable future.