The housing market heading into 2026 still looks nothing like the boom-and-bust whiplash of the last few years. Sales activity remains muted, and while mortgage rates have returned to the headlines following announcements from President Trump, rates are still elevated as of January 2026—keeping affordability strained and demand constrained.
In January, the latest data points to a market that’s cooling, but uneven by region. Inventory remains higher than a year ago in many parts of the country, and a growing number of supply-heavy markets are seeing home prices soften. At the same time, construction and insurance costs remain key swing factors that investors need to underwrite carefully, as they can materially shape both pricing power and cash flow.
Every month, investors are hit with a flood of new housing market data to consider. Each data point helps paint a picture of the current state of the U.S. housing market, but there are a few signals that are essential for savvy real estate investors to pay attention to.
To cut through the noise and help you stay up to date on what’s happening in today’s housing market, here’s LendingOne’s January 2026 market recap.
Price drops: The investor buyer’s market is expanding in supply-heavy metros
While national home price growth has flattened, there is still a distinct dispersion across metros.
Among the 200 largest metros, 79 markets saw home prices fall year-over-year between December 2024 and December 2025. Many of these are pandemic-era boom markets that expanded supply the most and are now being forced to re-anchor price levels to local incomes as demand resets at today’s payment levels.
The five metros with the largest year-over-year price declines include:
- Cape Coral-Fort Myers, FL: -9.7%
- North Port-Sarasota-Bradenton, FL: -8.2%
- Naples-Marco Island, FL: -6.5%
- Austin-Round Rock-Georgetown, TX: -6.0%
- Tampa-St. Petersburg-Clearwater, FL: -5.2%
Housing markets where prices are dropping
Investor takeaway: The best buying windows tend to open when price declines coincide with rising inventory—but investors should stress test local fundamentals, including employment, supply pipeline, insurance costs, taxes, and demographics to separate temporary softness from longer-term risk.
Insurance: High carrying costs are quietly reshaping affordability
Housing affordability isn’t just about prices and mortgage rates anymore — carrying costs like homeowners insurance are becoming a larger part of the equation, especially in higher-risk regions.
The latest county-level data from economists at the National Bureau of Economic Research shows median annual home insurance premiums in 2024 ranged from under $1,000 to more than $8,000. The highest costs are concentrated in Florida, parts of the Gulf Coast, and additional high-cost pockets in other weather damage-prone markets.
Median annual home insurance premiums by county
Investors should be careful, as even if home prices are softening in Florida, that “discount” can get partially—or fully—eaten up by the rising carry cost burden—especially insurance.
Florida counties represent four of the five markets with the highest median annual insurance premium costs:
- Monroe, FL: $9,400
- Orleans, LA: $7,513
- Broward, FL: $6,865
- Miami-Dade, FL: $6,375
- Palm Beach, FL: $6,326
So even if an investor is buying a home at a markdown, the annual premium difference vs. a “normal” market can be thousands of dollars—which directly hits cash flow and affordability for end buyers.
Investor takeaway: Florida price cuts can create opportunity (especially for well-capitalized buyers), but in many coastal and storm-exposed counties, insurance can overwhelm the value of the discount, making the true “all-in” affordability equation worse even as prices fall.
New permits: Builders stay cautious on single-family starts
Construction remains one of the key swing factors for housing supply — and January finally brought an updated read on how the last quarter of 2025 fared for new builds after the shutdown-related delays.
Single-family residential permits in October 2024: 971,000
Single-family residential permits in October 2025: 878,000
Multifamily (5 or more units) residential permits in October 2024: 394,000Multifamily (5 or more units) residential permits in October 2025: 478,000
U.S. housing permits
The newly released data shows that single-family building permits fell -9.6% year-over-year from October 2024 to October 2025, while multifamily 5 or more unit permits grew +21.3% year-over-year from October 2024 to October 2025.
This highlights a housing supply pipeline that remains split: single-family construction is easing, while multifamily continues to contribute new inventory.
Mortgage rates remain elevated, and some builders are still leaning on incentives to keep buyer traffic moving. That’s helping manage absorption—but it also highlights how carefully operators are protecting margins in today’s affordability-constrained market.
Investor takeaway: Falling single-family permits can support longer-term scarcity — but near-term conditions still depend heavily on active inventory and pricing behavior in each market. For investors, the key is understanding which metros are still “supply-heavy” vs. which are structurally constrained.
Inventory: Supply getting closer to “normal”—especially in the Sun Belt
Inventory remains the market’s pressure valve—and the clearest signal of how much leverage buyers and sellers have.
The latest read shows inventory continuing to rebuild across many Sun Belt and Mountain West markets, while a number of Northeast and Midwest metros remain meaningfully below pre-pandemic levels.
In other words: supply is coming back, but it’s coming back unevenly—with some markets now sitting well above their pre-pandemic baseline (the places that were hottest in 2021–2022), and others still operating with inventory levels far below 2019 levels.
Active housing inventory for sale compared to pre-pandemic levels
The five metro markets with the highest Dec. 2025 inventory vs. pre-pandemic Dec. 2019:
- Memphis, TN-MS-AR: +54.9%
- Austin-Round Rock-San Marcos, TX: +53.8%
- Phoenix-Mesa-Chandler, AZ: +46.6%
- Tucson, AZ: +44.5%
- Orlando-Kissimmee-Sanford, FL: +44.3%
The five metro markets with the lowest Dec. 2025 inventory vs. pre-pandemic Dec. 2019:
- Hartford–West Hartford–East Hartford, CT: −72.9%
- Chicago–Naperville–Elgin, IL-IN: −55.9%
- Providence–Warwick, RI-MA: −51.3%
- New York–Newark–Jersey City, NY-NJ: −43.8%
- Cleveland, OH: −40.0%
Buyer demand has reset to what buyers can actually afford at today’s monthly payments, more resale owners are listing as the “must-move” pool grows, and builders are siphoning off marginal buyers with rate buydowns and incentives.
Inventory seems to be rebuilding fastest in the markets where affordability stretched the most—and where the Pandemic Housing boom pushed demand the highest.
Investor takeaway: Markets where inventory is above pre-pandemic levels tend to be where pricing power is weakening fastest — which can create better acquisition entry points—especially when paired with resilient rent fundamentals.
Forecasts: A little national home price growth is expected in 2026
Forward-looking expectations are increasingly important in a market where price appreciation is no longer guaranteed.
Zillow’s latest metro-level forecast projects that national U.S. home prices will rise +2.1% between December 2025 and December 2026, but the metro-level outlook spans a wide range—from expected declines in some markets to stronger projected growth in others. Most forecasters expect U.S. home prices to rise +1% to +3% in 2026.
12-month forecast for metro-level home price change between December 2025 and December 2026, according to Zillow
The five metro markets (among the largest 200) with the highest projected home price change between Dec. 2025 and Dec. 2026:
- Rockford, IL: +6.2%
- Green Bay, WI: +5.3%
- Knoxville, TN: +5.2%
- Appleton, WI: +5.0%
- New Haven, CT: +4.9%
The five metro markets (among the largest 200) with the lowest projected home price change between Dec. 2025 and Dec. 2026:
- New Orleans, LA: -3.8%
- Lafayette, LA: -2.2%
- Austin, TX: -2.0%
- Shreveport, LA: -2.0%
- Denver, CO: -1.0%
Investor takeaway: Forecasts aren’t destiny—but they’re useful signals for spotting where pricing momentum is expected to stay weak vs. stabilize. Use this as a screening tool, then underwrite conservatively based on local inventory, affordability, and rent growth.
Big picture
January’s housing data reinforces the story of a market that is cooling—but not collapsing. Inventory remains higher than a year ago in much of the country, with some supply-heavy regions now above pre-pandemic levels. That’s translating into even more price weakening in select metros, even as other regions remain supply-constrained and comparatively stable.
The macro backdrop remains defined by affordability—and in 2026, policy and carrying costs (like insurance) are becoming a bigger part of the affordability conversation. Investors should stay selective, prioritize underwriting discipline, and focus on markets where rising inventory and softer pricing improve entry points while rental fundamentals remain stable.
