The U.S. housing market started 2026 with a median home price of $422,921, up just 1.1% year-over-year, as the strongest buyer’s market in recent memory keeps growth in check. Buyers now have negotiating power because homes for sale far outnumber active buyers, limiting price spikes.

Year-over-year growth has remained below 2% for the past 10 months, a sharp contrast to the double-digit gains seen during the pandemic buying frenzy. “Home prices grew so fast for so long that many buyers got shut out of the market, which is now causing growth to cool,” said Redfin Senior Economist Asad Khan.

Negotiating Power Shifts to Buyers

When sellers outnumber buyers, the market favors buyers, giving them leverage to negotiate. In January, homes sold for 2.1% less than their final list price—the largest January discount since 2023. Only 20.8% of homes sold above list price, the lowest January share since 2020.

Redfin economists predict that affordability will improve in 2026 as wage growth outpaces home-price growth. In January, U.S. wages rose 3.7% year-over-year—more than triple the growth in home prices. Meanwhile, the average 30-year fixed mortgage rate dropped to 6.1%, the lowest since 2022, slightly boosting purchasing power.

Sales Decline as Buyers Stay on the Sidelines

Despite slower price growth and lower rates, affordability challenges keep many buyers from entering the market. Pending home sales fell 0.9% month-over-month, and existing-home sales dropped 3.6%, marking the largest decline since November 2022. Overall, total home sales fell 2.3%—the biggest seasonally adjusted monthly drop since December 2022.

Economic uncertainty and winter storms also affected January activity. Nearly 40,000 home purchases were canceled—13.7% of all homes under contract—the highest January cancellation rate since 2017.

Sellers Retreat Amid Weak Buyer Demand

Active listings declined 1.3% month-over-month, the largest drop since June 2023. While new listings ticked up 1.4%, overall inventory remains slightly lower than a year ago. Many sellers are also buyers themselves and have opted to delay listing their homes due to high costs.

Homes Are Selling at a Decade-Long Slow Pace

With more sellers than buyers, homes are taking longer to sell. The median days on market for January was 66 days, the slowest pace for the month in a decade, up from 59 days a year earlier. This extended timeline underscores the continued strength of the buyer’s market and the negotiating advantage buyers enjoy