For most of the past five years, the American housing market has existed in one extreme or another. First came the pandemic-era frenzy, where buyers waived inspections and bid hundreds of thousands over asking price just to secure a home. Then came the rate shock of 2022-2024, when mortgage rates doubled and buyers retreated to the sidelines en masse.

Now, according to CNBC's quarterly Housing Market Survey, something different is emerging: balance. Of real estate agents surveyed in the fourth quarter, 37.5% characterized their local market as balanced—up from 30% just three months earlier. It's the strongest reading for market equilibrium since before COVID-19 upended everything.

What "Balance" Actually Means

In real estate parlance, a balanced market is one where neither buyers nor sellers hold decisive advantages. Properties don't fly off the market in hours with multiple competing offers. But they also don't languish for months with no interest. Negotiations are genuine. Inspections happen. Prices reflect fair value rather than hysteria in either direction.

"Using NAR month-supply data, the housing market is the most balanced it's been in almost a decade. Buyers have a little more leeway; sellers have to be more flexible, and that's a big shift from the pandemic years when sellers had nearly all the leverage."

— Housing market analyst

This equilibrium represents a significant psychological shift for both sides of transactions. Sellers who remember 2021, when their neighbors sold for $100,000 over asking with 15 competing bids, need to recalibrate expectations. Buyers who've been burned by losing bidding wars need to recognize that the market has become more navigable.

Regional Variations Persist

National averages, however, mask significant regional variation. The housing market remains highly local, with different dynamics playing out across the country:

South and West: More Balanced

In the Sun Belt and Western markets, where construction activity remained robust even during the rate spike, balance has arrived most dramatically. Markets like Phoenix, Austin, and Tampa that saw explosive pandemic-era gains have experienced meaningful correction.

Inventory in these regions has increased substantially as new construction comes online and sellers who previously refused to list at lower rates finally accept reality. The combination of more homes for sale and fewer frenzied buyers has restored negotiating dynamics that were absent for years.

Northeast and Midwest: Still Tight

In contrast, Northeastern and Midwestern markets remain relatively tight. Limited new construction, strong local economies, and buyers priced out of coastal markets have maintained competitive conditions in cities like Boston, Hartford, and Minneapolis.

In these areas, sellers still hold advantages, though nothing like the extremes of 2021. Multiple offers remain common for well-priced homes, and inventory, while improved, hasn't returned to pre-pandemic levels.

Agent Optimism for 2026

Perhaps the most striking finding in the CNBC survey is agent optimism about the coming year. Despite a slow end to 2025, 77% of surveyed agents expect 2026 to be better than the previous year. Additionally, 67.8% expect sales to improve in the first quarter specifically.

This optimism stems from several factors:

1. Rate Stability

Mortgage rates have stabilized in the low 6% range after years of volatility. While still elevated compared to the pandemic-era lows that spoiled everyone, rates are no longer moving dramatically week to week. This predictability helps both buyers planning purchases and sellers timing listings.

2. Growing Inventory

More homes are coming onto the market. The "lock-in effect"—where homeowners with ultra-low mortgage rates refuse to sell—is slowly weakening as life events force transactions. Job relocations, divorces, family growth, and deaths are compelling sales regardless of rate differentials.

3. Price Expectations Adjusting

The survey found that 92% of agents reported having at least one seller cut their price in Q4, compared with 89% the previous quarter. Nearly half said the majority of their sellers cut prices. This suggests seller expectations are becoming more realistic, which should facilitate more transactions.

The Buyer Experience Is Changing

For prospective homebuyers, the balanced market represents a significant improvement in experience:

  • Inspections are back: The days of waiving inspections to compete are largely over except in the tightest markets
  • Contingencies are possible: Financing and sale contingencies, which had become toxic to offers, are increasingly accepted
  • Negotiation happens: Buyers can negotiate price, repairs, and closing costs rather than simply accepting seller terms
  • Time to decide: Properties are staying on market longer, giving buyers time to think rather than making panicked decisions

These may seem like basic expectations for a major purchase, but they were luxuries unavailable to buyers just two years ago. Their return signals a healthier market dynamic.

Sellers Must Adjust

For sellers, the balanced market requires a different mindset:

Pricing Matters Again

In the frenzy, sellers could overprice significantly and still attract offers. That's no longer true. Homes priced above market value sit on the market, accumulating days and signaling to buyers that something may be wrong.

Agents report that properly priced homes still sell relatively quickly, but overpriced listings languish. The gap between list price and sale price has widened, indicating that initial pricing is more important than ever.

Condition Counts

When inventory was scarce, buyers accepted homes in almost any condition. Now, with more choices available, homes that need work or have deferred maintenance face steeper discounts. Sellers who invest in presentation and address obvious issues before listing are seeing better outcomes.

Flexibility Helps

Sellers who can be flexible on closing timelines, willing to make reasonable repairs, or open to negotiation on price are completing transactions. Those who maintain 2021 expectations are often left waiting.

The Affordability Picture

Despite the improved market dynamics, affordability remains the central challenge. Some agents report that buyers are being slowed "far, far less by interest rates than the intrinsic factors, the cost of living"—homeowners insurance, car insurance, utilities, and medical insurance are all taking larger bites from household budgets.

This broader affordability squeeze means that even as the transactional experience improves, many potential buyers remain sidelined. First-time buyers face particular challenges, competing for starter homes while carrying significant student loan debt and facing elevated costs across all spending categories.

The Income-Price Dynamic

One encouraging development: income growth is finally outpacing home price appreciation in many markets. If this trend continues through 2026, affordability should gradually improve even without dramatic rate cuts or price declines.

This slow healing may frustrate those hoping for a dramatic correction, but it represents a healthier path than either the boom or bust scenarios that could destabilize the broader economy.

What to Watch in 2026

Several factors will determine whether the balanced market persists:

Mortgage Rates

If rates decline toward 5%, buyer demand could surge and tip markets back toward seller advantage. Conversely, any unexpected rate spike could freeze activity and shift power back to buyers. Current forecasts expect rates to remain in the 6% range, supporting continued balance.

Inventory Trends

New construction activity and existing home listings will together determine supply. Builders remain active, which helps, but the lock-in effect continues constraining existing inventory. Watch for signs of either category accelerating or stalling.

Economic Conditions

A recession would quickly shift dynamics by reducing buyer demand and potentially forcing distressed sales. Current economic forecasts suggest continued growth, but risks remain from tariffs, geopolitical events, or unexpected shocks.

The Bottom Line

After years of extremes, the American housing market is finding its footing. Neither the frenzied seller's market of the pandemic nor the frozen conditions of the rate shock era define today's landscape. Instead, something approaching normalcy is emerging.

For buyers, this means better experiences and more negotiating power. For sellers, it means realistic expectations and the need to compete for attention. For the market as a whole, it means healthier dynamics that should facilitate more transactions and less regret.

Real estate agents, who see these dynamics daily, are optimistic about 2026. Their read deserves attention. When 77% of practitioners expect a better year ahead, something meaningful has shifted.

The balanced market isn't perfect—affordability challenges remain daunting for many buyers, and some sellers will struggle to accept new realities. But it's a significant improvement over either extreme. And for a market that seemed broken just two years ago, that progress is worth celebrating.