Compass Intelligence

We’re six weeks into the new year, and the spring housing market is beginning to reveal itself. The latest Compass Intelligence data shows a market that looks very different from this time last year—one where buyer demand is slowly responding to lower mortgage rates and inventory growth is losing momentum.

While activity remains measured, the direction of the data matters. Several key indicators suggest the market is stabilizing rather than weakening, even as buyers continue to hold leverage in many regions.

Buyer Demand Is Improving—Gradually

Lower mortgage rates are starting to influence buyer behavior. Pending home sales are inching higher, even with short-term disruptions such as recent weather-related slowdowns.

• Weekly pending sales are averaging 3.5% higher than 2025 levels
• This week saw a temporary dip due to a deep freeze, not a demand collapse

This kind of modest improvement signals that buyers are re-entering the market cautiously, not rushing—but also not retreating.

Inventory Growth Is Slowing Meaningfully

One of the clearest shifts in the data is inventory deceleration. A year ago, inventory growth was running near 30% year over year. Today, that gap has narrowed dramatically.

• 688,000 single-family homes are currently on the market
• Inventory is now only 8.7% higher than last year
• 75,000 homes withdrawn last fall have re-entered the market as re-listings

For those expecting a surge of new supply, this is an important moment. The inventory gap from 2025 is closing quickly, and the pace of growth is no longer accelerating.

Pricing Remains Soft but Stable

Home prices continue to show mild downward pressure, though the pace of decline is controlled.

• Median pending price: $388,475 → Just 1% higher than a year ago
• Asking price per square foot: → 1.7% lower year over year

These figures point to a market where pricing power remains limited, but there is no evidence of sharp price declines.

Price Reductions: The Leading Indicator to Watch

Price reductions remain one of the most powerful forward-looking indicators, and this week’s data is notable.

• 32.4% of listings have reduced prices
• That’s 90 basis points lower than last year
• Last year, price reductions were rising; this year, they’re falling

This shift suggests improving demand relative to last year. If price reductions fall below 30%, it would indicate enough buyer activity for sellers to hold firmer on pricing. For now, that threshold hasn’t been reached.

Who Has the Advantage Right Now?

Despite improving demand, buyers remain in the driver’s seat across much of the country. Price momentum is still slightly negative, and modest demand growth hasn’t yet been strong enough to reverse that trend.

At the same time, early indicators suggest prices are not set up for a significant decline. Instead, the market appears to be transitioning toward balance.

Looking Ahead

If inventory deceleration continues, it’s possible that by summer we could see inventory levels fall below last year’s totals. Historically, rising rates push inventory higher, while falling rates reduce it—and that shift is now underway.

This is a fundamentally different market than a year ago: slower, steadier, and increasingly driven by real-time data rather than headlines.

If you’d like help interpreting what these trends mean for your local market or your next move, let’s connect and walk through the data together.

Source: Altos Research, Compass, Mike Simonsen