MARKET REPORT | FEBRUARY
Price Corrections and Lower Rates Are Making Real Estate More Affordable
Over the past several quarters, we’ve seen a measurable shift in pricing dynamics across the housing market. Nationwide homebuyers are getting concessions and discounts from sellers at the highest rate in years. In 2025, 62% of buyers purchased a home below the original asking price. That was the highest share since 2019. For context, during pandemic boom, only 38% of homes sold below asking.
During the post-pandemic surge, aggressive bidding wars and compressed marketing timelines defined the landscape. Today, buyers are demonstrating greater price discipline. The result is more transactions closing at a discount to the initial ask.
This does not necessarily signal weakness but rather it reflects a normalization. Sellers who price aspirational are increasingly being met with resistance. The data shows a clear pattern: the longer a property remains on market, the greater the eventual discount from its original list price.
Every additional week on market often translates into negotiating power for buyers. Properties that are priced accurately at launch continue to transact efficiently, while those that overshoot market value are experiencing price adjustments and elongated marketing periods.
For brokers and developers, this underscores the importance of strategic pricing at inception. Chasing the market downward is materially more costly than positioning correctly from day one
Simultaneously, municipalities across the country are intensifying efforts to expand affordable housing inventory. From zoning reforms to incentives for mixed-income development, cities are responding to sustained affordability pressures.
Markets such as New York City, Austin, and Miami are actively advancing initiatives aimed at increasing rental supply, particularly in the workforce and middle-income segments. While execution timelines vary, the long-term objective is clear at stabilize housing costs by expanding inventory.
For investors and operators, this shift presents both challenges and opportunity. Incentivized development programs, public-private partnerships, and density bonuses are becoming more central to urban growth strategies.
Another key variable reshaping the landscape is capital cost. As interest rates trend lower from their recent peaks, purchasing power is gradually improving. When combined with price corrections in certain submarkets, affordability metrics are beginning to normalize.
This convergence has moderated pricing and more favorable financing conditions. It is reopening the door for sidelined buyers. First-time purchasers, move-up buyers, and long-term investors are re-entering the conversation with a more rational underwriting framework.
More importantly though, affordability does not hinge on one variable alone. It is the interaction between price, rates, wage growth, and supply that determines true accessibility. The current environment reflects incremental improvement across multiple inputs rather than a single dramatic shift.
Mortgage Rates
Mortgage rates dropped again this week, now down to their lowest level since September of 2022. The lower rate environment is not only improving affordability for prospective homebuyers, it’s also strengthening the financial position of homeowners. Over the past year, refinance application activity has more than doubled, enabling many recent buyers to reduce their annual mortgage payments by thousands of dollars.
Global Market Snapshots and Headlines
- US Mortgage Rates Fall to Lowest Level in More than Three Years
- UK Residential Land Prices May Have Bottomed
- Canada Home Prices Slide as Snowstorms Chill Buying
- Dubai Developer H&H Sees Luxury Property Boom Continuing in 2026
- Europe’s Sluggish Property Market is Slowly Coming Back to Life
- Rent In London’s Poshest Postcodes Falls for the First Time in Four Years
- European Commercial Real Estate Has Its Best Quarter Since ECB Raised Rates
Economic Outlook – What to Expect From the New Fed Chair Pick
Just this morning it was announced that Kevin Warsh would be nominated to replace Jerome Powell as head of the Federal Reserve. While Warsh is a former Fed Governor himself he has historically been know to be an inflation hawk, meaning he’s more concerned about rising inflation than anything else. Recent comments from him suggest that he has had an inverse approach to what his operational strategy has been and has been public in his sentiments that “rates should be significantly lower.”
While the head of the Federal Reserve does not and cannot singularly lower rates at any given time, the influence he is expected to have over the 12 person voting body of the Federal Open Market Committee (FOMC) who do vote on rate cuts can have positive effects on a lower rate environment moving through the second half of 2026. This week, the Fed elected to keep rates unchanged due to the strength of the economy and even with a tight labor market, unemployment rates still show the US at was is considered to be full employment.
With cheaper capital available, combined with an economy experiencing de-regulation and the steady decrease in housing prices, we may see issues of affordability start to dissipate over the next 18-24 months if the bullish beliefs of Warsh’s intentions to bring rate down. Powell’s current term ends in May of this year but that doesn’t mean he couldn’t stll be a voice within the Fed as any chairman can move into a governor position which he has still yet to indicate if he will do.
Taken together, this evolving leadership dynamic at the Fed reinforces an important theme for markets and housing alike: policy is shifting from restraint toward optionality. While nothing is guaranteed and timing is never linear, the combination of a resilient economy, moderating housing prices, and the growing possibility of a more accommodative rate environment creates a constructive backdrop as we look ahead. For buyers, sellers, and investors, the second half of 2026 will increasingly become about preparedness and positioning rather than hesitation.
