Housing News

Home Prices Are Falling, Hitting a Four-Year Low

Home prices are edging lower nationally. While the decline has been modest, the direction is beginning to matter, especially as mortgage rates show signs of easing.

The national median list price fell to $399,950 in December, according to Realtor.com’s monthly housing report. It marked the first time since March 2022 that the median list price dipped below $400,000.

December’s figure also represented the lowest median list price for that month since 2022, when prices stood at $369,158.

On its own, the drop in home prices does not signal a dramatic housing market reset. However, taken alongside interest rates hovering at a 14-month low and a housing market with more listings and longer selling timelines, it suggests that affordability may be slowly improving as 2026 kicks into gear.

For buyers, even small price adjustments can matter when paired with lower mortgage rates. Together, those changes can translate into more manageable monthly payments and an increase in the number of homes they can afford.

Jake Krimmel, senior economist at Realtor.com, approached the news with cautious optimism.

“While it’s important not to read too much into list price declines at the end of the year when very few buyers are searching,” Krimmel said, “the flat-to-falling list prices we have seen in the second half of 2025…signals slight improvements in affordability heading into 2026.”

Krimmel added that seller behavior may finally be shifting.

“Heading into 2026, it could be that sellers are finally recognizing the market is moving in a buyer-friendly direction and so asking prices must come down as a result,” he said.

Housing stock grows unevenly around the country

The number of homes for sale rose 12.1% in December compared with a year earlier. That marked the 26th consecutive month of year-over-year gains in housing stock.

More homes for sale is a boon for buyers as they have more options to choose from. There is also less competition for homes, which can keep a lid on home prices and give buyers negotiating power in many markets.

However, the growth pace has slowed. Housing stock peaked near 30% in late spring and early summer of 2025. Yet national inventory levels remain 12.5% below typical 2017 to 2019 norms.

Those national figures don’t reveal what is happening in a buyer’s local market and how much that matters.

“Looking at the housing market through national or even regional averages can miss what’s really happening on the ground,” said chief economist at Realtor.com Danielle Hale, in a statement. “As buyers and sellers plan for the year ahead, knowing which markets align to broader trends and which are charting their own course can help set more realistic expectations.”

With that in mind, buyers should pay attention to local conditions. In markets where housing stock has grown and price cuts are becoming more common, buyers often have the upper hand.

How homebuyers can use this shift to shop smarter

As 2026 begins, the housing market appears to be on a gradual path toward greater balance.

Buyers can use the drop in home prices by nailing down a more comfortable monthly mortgage payment. Softer demand also means buyers may be more likely to find homes that fit within that target.

Home shoppers can also use recent price trends as leverage. Sellers in markets where prices are flattening or slipping may be more open to negotiation, whether that’s on price, closing cost credits, or repairs. Those concessions can directly affect the overall mortgage, lowering the amount borrowed or reducing upfront costs.

Finally, buyers should revisit their mortgage options. Lower rates can change which loans make the most sense for their situations.

Taken together, easing prices and falling rates don’t guarantee affordability. But they do give buyers more control than they’ve had in years, especially those willing to shop carefully.