Higher Rates Changed The Housing Market and These May Be the Rules Going Forward, New Realtor.com® Report
MWN-AI** Summary
A new report from Realtor.com® highlights how rising interest rates have transformed the U.S. housing market over the past four years. Since January 2022, mortgage rates have surged from around 3% to 6.10%, with a peak near 7.79%. This increase has led to cooling demand and an uptick in housing inventory, which has expanded by 142.1% nationwide. However, prices have remained unexpectedly resilient, rising 8.1% in median listing prices since January 2022.
The report emphasizes a phenomenon called the "lock-in effect," where homeowners are reluctant to sell due to their current low mortgage rates, with over 50% of borrowers holding below 4%. This reluctance complicates the supply-demand equation, suggesting that even as new listings increase, many sellers are waiting for favorable pricing rather than aggressively pursuing sales.
Regional disparities have emerged in the inventory recovery, with areas like the West and South seeing increases of over 200%, while the Northeast and Midwest lag behind. The volatility in supply dynamics fosters a market where affordability remains strained and price pressures persist.
As we consider the potential future of the housing market, Realtor.com's senior economist Jake Krimmel notes the challenge lies in achieving a balance where supply can increase without reigniting buyer demand. This ongoing tension illustrates the need for sustainable growth in listings to alleviate affordability issues. Consequently, while some recovery is evident, the market remains tightly controlled, leaving many buyers navigating a constrained environment. The report argues that the recalibration of market dynamics rather than a complete reset may dictate the housing rules going forward.
MWN-AI** Analysis
The housing market landscape continues to evolve under the impact of higher mortgage rates, creating dynamics not seen in previous cycles. As highlighted in Realtor.com®'s recent report, the shift that began in early 2022 appears to have cemented into a new norm where higher interest rates, uneven supply, and persistent price increases coalesce to challenge affordability.
For prospective buyers, the data reveals that while mortgage rates peaked at 7.79% before settling around 6.10%, inventory has surged by over 140%, suggesting a shift towards increased availability of listings. Nevertheless, the median list price has surprisingly risen 8.1%, underscoring a robust resilience in housing prices despite the obvious pressure from elevated borrowing costs.
This "lock-in effect," where homeowners are reluctant to sell their homes with favorable, lower-rate mortgages, continues to limit the market. This reluctance restricts inventory growth, which makes it imperative for buyers to act strategically. To navigate this environment, buyers should focus on regions experiencing significant inventory growth (like the South and West) where listings have increased by over 200% in some metros. These areas may provide better opportunities for price negotiation.
Furthermore, potential buyers and investors should keep an eye on local market indicators such as days on market and recent sales trends. Areas with rapidly rising prices coupled with prolonged days on market may signal forthcoming corrections or adjustments. Recognizing these localized shifts can be advantageous in making informed decisions.
Overall, the housing market reflects a new equilibrium influenced by consistent higher rates. Buyers must be prepared for ongoing volatility while focusing on emerging opportunities, understanding that market navigation will rely heavily on timing and regional insights to achieve favorable outcomes.
**MWN-AI Summary and Analysis is based on asking OpenAI to summarize and analyze this news release.
PR Newswire
Housing Market Defined by New Dynamics, Where Higher Rates, Uneven Supply and High Prices Coexist, Challenging Affordability
AUSTIN, Texas, Feb. 23, 2026 /PRNewswire/ -- January 2026 marks four years since interest rates started rising and created a shift that fundamentally altered how the U.S. housing market functions. A new report from Realtor.com® finds that the reset some expected never fully materialized. While higher mortgage rates did cool demand and bring more homes to market, they failed to deliver broad price relief, leaving affordability strained and market dynamics behaving differently than in the past.
Four years into the high-rate era, the data suggest the housing market may be entering a more durable phase defined by higher borrowing costs, uneven supply and persistently elevated prices. According to Realtor.com®, falling rates could ease the lock-in effect and draw more sellers back to the market, but they may also reignite buyer demand, limiting meaningful affordability gains. These competing forces point to a future where housing remains structurally tighter, even as conditions evolve.
"Four years into this higher-rate environment, it's clear that the housing market recalibrated rather than reset," said Jake Krimmel, senior economist at Realtor.com®. "Supply and demand moved in the directions economic theory would suggest, but prices proved far more resilient than many anticipated, leaving today's affordability challenges firmly in place. "Looking forward, the real test is whether market activity can normalize without reigniting price pressure. That will depend on easing lock-in, stronger new listing growth, and fewer delistings."
Since January 2022, mortgage rates climbed as high as 7.79% and currently sit near 6.10%. Over that same period, active inventory nationwide surged 142.1%, rebounding sharply from historically low levels. Yet despite a much higher cost of financing and a significant increase in available homes, national prices continued to rise. The median list price is up 8.1% compared to January 2022, while price per square foot has climbed 11.4%.
"These long-term price gains matter because they compound the affordability hit from higher mortgage rates," said Krimmel. "Even before factoring in borrowing costs, the price side of the equation adjusted much less than most expected, especially in the most supply-starved markets."
Lock In Effect At Heart of Disconnect
At the heart of this disconnect is the lock-in effect. Millions of homeowners remain anchored to ultra-low mortgage rates secured earlier in the decade, limiting the ability to sell. A recent Realtor.com analysis of outstanding mortgages shows that a substantial majority of homeowners still hold rates well below today's prevailing levels, over 50% of borrowers holding rates below 4%. For many households, moving would mean replacing a historically low mortgage with one nearly twice as expensive Looking ahead, the path out of the affordability bind remains uncertain. Falling rates could ease lock-in and bring more homes to market, but lower borrowing costs also risk reigniting demand, a potential catch-22 for buyers hoping for meaningful price relief.
"That's the tension in today's market," Krimmel said. "Lower rates could unlock more supply, but they could also bring buyers back faster than listings recover. The path to meaningful affordability relief depends on supply growing sustainably—not just demand returning. Lock-in removed a lot of discretionary buyers from the market, leaving a lot of people moving out of necessity who were less price sensitive. As those buyers eventually return and list their own home too, that will add some much needed liquidity to the market."
Market is Defined by Deep Regional Differences
The inventory recovery itself has been anything but uniform. Western and Southern markets led the rebound, with active listings up 211% in the West and 178% in the South since January 2022. In metros like Dallas, Raleigh, Austin, Denver, Tampa, and Nashville, listings have increased by more than 350%, a dramatic reversal from the early pandemic shortage.
In contrast, inventory growth has been far more muted in the Northeast (+23%) and Midwest (+68%). Some markets, including Chicago, Hartford, and New York, actually have fewer active listings today than they did four years ago.
An Uneven Recovery: Changes from January 2022-January 2026 | ||||||
Active Listings, | Median List | Median List | Median Days | New Listings, | Price Reduced | |
USA | 142.1 % | 8.1 % | 11.5 % | 19 | 1.7 % | 8.2 |
Northeast | 22.4 % | 15.3 % | 17.5 % | 2 | -13.5 % | 2.8 |
Midwest | 67.1 % | 22.0 % | 18.8 % | 11 | -10.3 % | 4.2 |
South | 213.7 % | 7.4 % | 12.1 % | 23 | 9.1 % | 9.6 |
West | 180.0 % | 2.2 % | 3.8 % | 30 | 2.7 % | 10.6 |
Despite these stark regional differences, and despite the sheer volume of new supply in many metros, price declines remained rare and shallow. Only eight major metros posted declines in list price per square foot relative to January 2022: San Francisco, Austin, Denver, San Jose, San Antonio, Washington, D.C., Sacramento, and Miami. Across the top 50 markets, prices per square foot are higher today in 42 of them and up on average in every major region, led by the Midwest (+18.7%) and Northeast (+16.9%).
"What we've learned is that the laws of supply and demand still apply, but the relationship has weakened," said Krimmel. "Even a flood of listings and much higher financing costs weren't enough to generate broad-based price relief."
Four Years of Higher Rates Affects Home Prices
On the whole, and especially recently, inventory has grown due to longer time on market for existing listings rather than inflows of new listings. In 2021 and early 2022, new listings accounted for roughly 85% to 90% of active listings in a typical month nationwide. Homes moved quickly (59 days in Jan. 2022 compared to 78 days in Jan. 2026), and inventory turned over at an unusually rapid pace (well below the pre-pandemic January norm of 84 days). By January 2026, that ratio had fallen to just 36%.
Jan. 2022 | Jan. 2023 | Jan. 2024 | Jan. 2025 | Jan. 2026 | |
Ratio of New Listings to | 85.9 % | 46.5 % | 44.3 % | 39.4 % | 36.1 % |
Median Days on | 59 | 72 | 69 | 73 | 78 |
"This shift indicates that the rise in active inventory has been driven less by a steady stream of new sellers entering the market and more by homes remaining listed for longer periods," said Krimmel. "Sellers are patiently testing price levels and waiting for buyers, rather than pricing aggressively to move quickly."
Delistings Act as a Backstop to Price Declines
Throughout 2025, delistings increased substantially, acting as a sort of "emergency exit" for sellers who would rather not face the reality of a shifting market. Across the last five Januaries, delistings have more than doubled as a share of active listings and quadrupled as a share of new listings.
Delistings as a share of: | ||
Active Listings | New Listings | |
Jan. 2026 | 7.0 % | 32.0 % |
Jan. 2025 | 6.6 % | 24.3 % |
Jan. 2024 | 5.7 % | 19.2 % |
Jan. 2023 | 5.3 % | 17.8 % |
Jan. 2022 | 3.1 % | 8.4 % |
"In many cases, delisting reflects not seller distress but privilege, where today's homeowners sit on historically high levels of home equity and a strong majority have low fixed mortgage rates," said Krimmel. "That combination gives sellers flexibility and the luxury to list, delist, repeat until they get their price. As a result, rather than clearing, the market has a tendency to stall out."
An Uneven Recovery: Changes from January 2022-January 2026 | ||||||
Metro | Active Listings, | Median List Price, | Median List PPSF, | Median Days | New Listings, | Price Reduced Share, |
Atlanta-Sandy Springs-Roswell, GA | 170.2 % | 2.6 % | 5.1 % | 19 | -4.9 % | 10.7 |
Austin-Round Rock-San Marcos, TX | 384.9 % | -17.1 % | -11.4 % | 45 | 22.3 % | 9.7 |
Baltimore-Columbia-Towson, MD | 83.9 % | 18.4 % | 11.4 % | 4 | -9.4 % | 4.4 |
Birmingham, AL | 160.4 % | 9.5 % | 12.2 % | 13 | 13.5 % | 8.9 |
Boston-Cambridge-Newton, MA-NH | 61.8 % | 5.8 % | 7.7 % | 7 | -1.9 % | 5.3 |
Buffalo-Cheektowaga, NY | 50.9 % | 21.0 % | 26.5 % | -7 | -14.2 % | 3.3 |
Charlotte-Concord-Gastonia, NC-SC | 291.1 % | 3.9 % | 9.3 % | 39 | 15.8 % | 10.0 |
Chicago-Naperville-Elgin, IL-IN | -1.4 % | 9.4 % | 7.4 % | 1 | -28.6 % | 3.4 |
Cincinnati, OH-KY-IN | 95.2 % | 10.5 % | 17.3 % | 2 | 2.8 % | 5.1 |
Cleveland, OH | 40.9 % | 41.2 % | 34.8 % | 6 | -14.8 % | 6.0 |
Columbus, OH | 131.9 % | 16.7 % | 14.6 % | 29 | 0.5 % | 8.5 |
Dallas-Fort Worth-Arlington, TX | 365.4 % | 0.3 % | 2.8 % | 32 | 4.7 % | 12.0 |
Denver-Aurora-Centennial, CO | 401.8 % | -14.1 % | -6.6 % | 48 | 40.2 % | 16.0 |
Detroit-Warren-Dearborn, MI | 63.3 % | 14.6 % | 10.0 % | 11 | -12.2 % | 3.7 |
Grand Rapids-Wyoming-Kentwood, MI | 97.6 % | 22.8 % | 22.6 % | 15.5 | -12.8 % | 4.7 |
Hartford-West Hartford-East Hartford, CT | -8.6 % | 18.1 % | 23.0 % | -7 | -38.9 % | 3.2 |
Houston-Pasadena-The Woodlands, TX | 144.2 % | -1.7 % | 0.5 % | 5 | -0.1 % | 6.5 |
Indianapolis-Carmel-Greenwood, IN | 191.0 % | 9.0 % | 21.5 % | 26 | -2.5 % | 9.5 |
Jacksonville, FL | 247.0 % | 0.0 % | 4.8 % | 34 | 14.1 % | 15.4 |
Kansas City, MO-KS | 133.5 % | 4.1 % | 9.5 % | 3 | 10.1 % | 6.4 |
Las Vegas-Henderson-North Las Vegas, NV | 132.2 % | 0.0 % | 7.8 % | 34 | -12.5 % | 10.9 |
Los Angeles-Long Beach-Anaheim, CA | 125.3 % | 11.4 % | 10.6 % | 22 | -2.1 % | 7.1 |
Louisville/Jefferson County, KY-IN | 117.2 % | 13.2 % | 15.1 % | 12 | 0.3 % | 6.0 |
Memphis, TN-MS-AR | 298.9 % | 36.4 % | 17.3 % | 34 | 13.8 % | 12.6 |
Miami-Fort Lauderdale-West Palm Beach, FL | 201.1 % | 1.0 % | -0.3 % | 27 | 12.5 % | 11.2 |
Milwaukee-Waukesha, WI | 4.7 % | 40.4 % | 34.0 % | 8 | -11.4 % | 3.0 |
Minneapolis-St. Paul-Bloomington, MN-WI | 50.0 % | 8.7 % | 5.2 % | 6 | -9.2 % | 5.7 |
Nashville-Davidson--Murfreesboro--Franklin, TN | 429.4 % | 15.9 % | 11.5 % | 45 | 35.0 % | 7.5 |
New York-Newark-Jersey City, NY-NJ | -0.8 % | 19.8 % | 19.2 % | -3 | -11.6 % | 1.3 |
Oklahoma City, OK | 232.9 % | 1.7 % | 6.0 % | 15 | -26.3 % | 10.5 |
Orlando-Kissimmee-Sanford, FL | 343.0 % | 4.4 % | 7.8 % | 45 | 14.5 % | 14.9 |
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD | 35.8 % | 16.7 % | 16.1 % | 3 | -13.5 % | 3.9 |
Phoenix-Mesa-Chandler, AZ | 307.8 % | -2.0 % | 3.1 % | 38 | 13.9 % | 18.9 |
Pittsburgh, PA | 52.2 % | 19.5 % | 17.3 % | 7 | 1.3 % | 1.9 |
Portland-Vancouver-Hillsboro, OR-WA | 202.6 % | 4.5 % | 1.8 % | 28 | -4.8 % | 10.6 |
Providence-Warwick, RI-MA | 46.3 % | 22.2 % | 23.9 % | 15 | -14.5 % | 4.7 |
Raleigh-Cary, NC | 370.5 % | 3.4 % | 5.1 % | 41 | 33.0 % | 11.4 |
Richmond, VA | 99.1 % | 16.9 % | 20.6 % | -12 | -14.3 % | 7.4 |
Riverside-San Bernardino-Ontario, CA | 178.2 % | 7.3 % | 13.7 % | 30 | -1.8 % | 10.4 |
Sacramento-Roseville-Folsom, CA | 112.0 % | -3.4 % | -0.6 % | 25 | -8.7 % | 7.7 |
St. Louis, MO-IL | 66.8 % | 16.8 % | 14.2 % | 15 | -10.3 % | 5.6 |
San Antonio-New Braunfels, TX | 240.1 % | -5.8 % | -5.0 % | 32 | 10.0 % | 15.3 |
San Diego-Chula Vista-Carlsbad, CA | 171.9 % | 6.0 % | 11.5 % | 17 | -9.5 % | 9.3 |
San Francisco-Oakland-Fremont, CA | 55.5 % | -9.5 % | -13.4 % | 18 | -13.6 % | 4.7 |
San Jose-Sunnyvale-Santa Clara, CA | 100.4 % | -8.0 % | -5.7 % | 1 | 7.9 % | 4.2 |
Seattle-Tacoma-Bellevue, WA | 339.5 % | 6.6 % | 7.7 % | 39.5 | 9.0 % | 10.7 |
Tampa-St. Petersburg-Clearwater, FL | 414.8 % | 3.8 % | 4.6 % | 45 | 20.7 % | 19.1 |
Tucson, AZ | 186.6 % | 5.5 % | 12.2 % | 23 | 12.7 % | 13.2 |
Virginia Beach-Chesapeake-Norfolk, VA-NC | 58.2 % | 27.4 % | 23.9 % | 17 | 3.9 % | 6.5 |
Washington-Arlington-Alexandria, DC-VA-MD-WV | 97.2 % | 8.9 % | -0.8 % | 10 | -9.0 % | 4.8 |
Methodology
Realtor.com housing data as of January 2026. Listings include the active inventory of existing single-family homes and condos/townhomes/row homes/co-ops for the given level of geography on Realtor.com; new construction is excluded unless listed via an MLS that provides listing data to Realtor.com. Realtor.com data history goes back to July 2016. The 50 largest U.S. metropolitan areas as defined by the Office of Management and Budget (OMB-202301) and Claritas 2025 estimates of household counts.
Beginning with our April 2025 report, we have transitioned to a revised national pending home sales data series that applies enhanced cleaning methods to improve consistency and accuracy over time. While the insights and commentary in this report reflect the new series, the downloadable data remains based on our legacy automated pipeline. As a result, there may be slight differences between the report figures and those in the national download file as we transition.
With the release of its January 2025 housing trends report, Realtor.com® has restated data points for some previous months. As a result of these changes, some of the data released since January 2025 will not be directly comparable with previous data releases (files downloaded before January 2025) and Realtor.com® economics research reports.
About Realtor.com®
Realtor.com® pioneered online real estate and has been at the forefront for over 25 years, connecting buyers, sellers, and renters with trusted insights, professional guidance and powerful tools to help them find their perfect home. Recognized as the No. 1 site trusted by real estate professionals, Realtor.com® is a valued partner, delivering consumer connections and a robust suite of marketing tools to support business growth. Realtor.com® is operated by News Corp [Nasdaq: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc.
Media contact: Mallory Micetich, press@realtor.com
SOURCE Realtor.com
FAQ**
How has the shift in the housing market dynamics due to higher rates affected the overall strategy for property investments by companies like News Corporation NWSA?
In what ways does the "lock-in effect" highlighted in the Realtor.com report specifically impact the investment decisions of firms such as News Corporation NWSA in the housing market?
With Realtor.com indicating uneven inventory recovery across regions, how might News Corporation NWSA adapt its real estate strategies to capitalize on these regional differences in the housing market?
Considering the persistent price rises despite higher mortgage rates, what implications does this have for News Corporation NWSA's future investments in real estate and development markets as indicated in the Realtor.com findings?
**MWN-AI FAQ is based on asking OpenAI questions about News Corporation (NASDAQ: NWS).
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