December 2025 National Housing Market Update

National Market Update Krista Freshour February 5, 2026

National Real Estate Market Update – December 2025

The U.S. housing market closed out 2025 with renewed momentum. According to the National Association of REALTORS® (NAR), existing-home sales rose 5.1% month-over-month in December, reaching a seasonally adjusted annual rate of 4.35 million. This marks the strongest pace of activity in nearly three years and signals improving conditions heading into 2026.

Year-over-year, sales increased 1.4%, supported by easing mortgage rates and slower price growth after several challenging years for buyers.

NAR Chief Economist Lawrence Yun noted that while 2025 was defined by affordability pressure and limited supply, fourth-quarter improvements helped restore buyer confidence. December’s gains were broad-based, with all four regions posting month-over-month sales increases.

Inventory Tightens as Buyer Activity Picks Up

Inventory remains one of the defining factors in the market.

Total housing inventory: 1.18 million homes
Month-over-month change: –18.1%
Months of supply: 3.3 months (down from 4.2 in November)

While inventory is slightly higher than this time last year, the sharp monthly decline reflects typical seasonal patterns and cautious seller behavior. Many homeowners are still waiting for optimal timing before listing, though historically, more inventory tends to emerge starting in late winter.

Home Prices Hold Steady Nationally

Despite affordability concerns, home prices continued their gradual upward trend.

National median existing-home price: $405,400
Year-over-year change: +0.4%
30th consecutive month of annual price growth

Price appreciation has slowed compared to prior years, which is helping improve balance between buyers and sellers without eroding long-term value.

Single-Family vs. Condo Market

Single-Family Homes

Sales increased 5.1% month-over-month
Median price: $409,500 (+0.2% YoY)

Condominiums & Co-ops

Sales increased 5.3% month-over-month
Median price: $364,400 (+1.5% YoY)
Sales remain slightly lower than last year

Regional Trends to Watch

South:
Sales jumped 6.9% month-over-month and 3.6% year-over-year, reinforcing the region’s position as one of the strongest housing markets in the country.
Midwest:
Modest monthly growth with steady pricing and balanced supply.
West:
Monthly improvement, but year-over-year sales remain flat due to higher price points.
Northeast:
Sales improved month-to-month but declined slightly compared to last year, largely due to supply constraints.

Mortgage Rates Provide a Boost

Mortgage rates continued to trend downward at the end of the year:

Average 30-year fixed rate: 6.19%
Down from 6.24% in November and 6.72% one year ago

While rates remain higher than pre-pandemic norms, this decline has improved purchasing power and encouraged buyers back into the market.

What This Means for East Tennessee

East Tennessee continues to benefit from many of the same trends driving the Southern market overall. With job growth, in-migration, and relatively affordable home prices compared to national averages, the region remains attractive for both buyers and sellers.

Key takeaways locally:

Buyer activity is picking up, especially among motivated purchasers watching rates closely.
Inventory remains tight, which continues to support home values across Knoxville and surrounding counties.
Well-priced homes are still moving, even during the slower winter months.
Sellers entering the market early in 2026 may benefit from limited competition before spring inventory increases.

Looking Ahead to Early 2026

As mortgage rates stabilize and inventory gradually improves, the market is expected to become more balanced. Buyers may find better opportunities in the months ahead, while sellers who prepare early and price strategically remain well-positioned.

Staying informed and understanding how national trends translate locally will be key as East Tennessee moves into the next phase of the housing market in 2026.