The U.S. housing market ended 2025 on a note of transition, with a growing number of real estate agents describing conditions as more balanced. While still favoring buyers in many areas, a significant shift in sentiment suggests the market dynamics are slowly evening out after a period of clear buyer advantage.
Key Takeaways
- Nearly 38% of real estate agents now describe the market as balanced, an increase from 30% in the previous quarter.
- An overwhelming 92% of agents reported sellers cutting their asking prices in the final quarter of 2025.
- A major disconnect persists, with buyers viewing the market like the 2008 crash and sellers recalling the 2021 frenzy.
- Despite challenges, 77% of agents are optimistic that 2026 will see better sales activity than 2025.
A Shift Toward Equilibrium
The final quarter of 2025 saw a noticeable change in the U.S. real estate landscape. According to a recent survey of real estate professionals, 37.5% of agents now characterize their local conditions as a balanced market. This marks a notable increase from the 30% who felt the same way in the third quarter.
This move towards equilibrium comes as mortgage rates found a stable, albeit high, plateau. After a sharp drop earlier in the year, the average rate for a 30-year fixed mortgage hovered between 6.2% and 6.4% late in the year. This stability, however, failed to spark a surge in activity, leaving many potential buyers waiting for a stronger incentive to enter the market.
Many transactions that are occurring are driven by necessity rather than opportunity. "The buyers I have seen have been buying because of life circumstances, whether it’s having a baby or moving for a job or retiring or downsizing," said Ashley Rummage, a real estate agent based in Raleigh, North Carolina.
What is a Balanced Market?
A balanced real estate market is one where supply and demand are roughly equal. This means there are enough homes available to meet buyer demand without creating a surplus that drives prices down or a shortage that causes bidding wars. In this environment, both buyers and sellers have some negotiating power.
The Great Expectation Gap
Despite the trend toward balance, a significant psychological gap remains between buyers and sellers. This difference in perception is one of the biggest hurdles in today's market, slowing down negotiations and leading to frustration on both sides.
“Buyers tend to think that the market is like 2008 and sellers tend to think that the market is closer to 2021, 2022, and those are diametrically opposed markets and diametrically opposed mindsets,” explained John Fragola, a real estate agent in Charleston, South Carolina.
This disconnect is rooted in recent memory. Buyers are looking for deep discounts reminiscent of the post-2008 housing crash, while many sellers are still anchored to the record-high prices and intense bidding wars of the pandemic-era buying frenzy in 2021.
Sellers Adjust to a New Reality
The data clearly shows that sellers are being forced to adjust their expectations. An overwhelming 92% of agents reported having at least one seller cut their price in the fourth quarter, an increase from 89% in the prior quarter. Furthermore, nearly half of all agents said the majority of their sellers had to reduce their initial asking price.
Price cuts are not the only tool being used. Seller concessions—credits offered to buyers to cover closing costs or mortgage rate buydowns—are becoming more common.
"Concessions have gotten bigger, especially in my market," Rummage noted. "As the year has gone by and their listings sat, they had to get more comfortable with understanding the fact that they were probably going to have to offer some concessions to get the transaction done."
For some sellers, however, adjusting is not an option. A growing number are choosing to delist their properties altogether, hoping for better conditions in the spring. "I personally had some clients who said, ‘Let’s just pause, pump the brakes here and we’ll come back on in the spring market when there’s more buyers out,'" Fragola said.
By the Numbers: Market Realities
- 92% of agents saw sellers cut prices in Q4 2025.
- 6.2% - 6.4% was the stable range for a 30-year fixed mortgage in late 2025.
- 72 real estate agents across the U.S. participated in the end-of-year survey.
Buyers Grapple with Affordability
While easing prices offer some relief, overall affordability remains a significant challenge. However, it appears buyers are beginning to accept the current high-price environment as the new normal. Fewer buyers were reported to have left the market or delayed purchases in the fourth quarter compared to the third.
Agents also noted that buyers were compromising less on factors like home size, location, and features, suggesting a growing resignation to current market costs.
Yet, the mortgage payment is only part of the financial pressure. Heather Dell, an agent in Detroit, pointed out that the rising cost of living is a primary concern for her clients. “Homeowners insurance, car insurance and utilities and medical insurance are the top objections that I hear when a buyer talks about buying,” she stated, indicating these factors can be more daunting than interest rates themselves.
Cautious Optimism for 2026
Looking ahead, the real estate community is expressing a sense of cautious optimism. Despite the slow end to 2025, a strong majority of agents believe the market is poised for improvement. Nearly 68% expect sales to pick up in the first quarter of 2026, and an even more confident 77% anticipate that the full year will be better than 2025.
This positive outlook is fueled by growing inventory and a sense that consumers are adapting to the current economic climate. The anxiety that defined much of the post-pandemic market seems to be giving way to a more pragmatic approach.
"I think a lot of people are feeling a little bit more comfortable with the unknown," Rummage concluded. "Sentiment has shifted from anxiety to cautious optimism."
