U.S. home values declined for the sixth consecutive month in January, dropping 0.4% from December, according to Zillow’s latest market report.
Despite the continued slide in prices, buying conditions are showing signs of improvement, with monthly mortgage payments falling 8.4% compared to a year ago.
The Zillow Home Value Index places the typical home value at $358,968, just 0.2% higher than this time last year. While sales volume remained sluggish in January — dampened by severe winter weather across much of the country — inventory levels are rising, and the market appears poised for a gradual recovery in transaction volume as spring approaches.
The housing market is emerging from three years of historically low transaction volumes and persistent affordability challenges. However, Zillow data suggests the financial pressure on buyers is easing. The monthly mortgage payment on a typical U.S. home is now $1,733, assuming a 20% downpayment. This represents an 8.4% decrease from January 2025, fueled largely by lower mortgage rates.
“Housing affordability continues to improve for prospective homebuyers,” the report notes, with this shift creating a “friendlier shopping environment” than the previous year.
Homes are lingering on the market longer, with the median time to pending status reaching 47 days — eight days longer than last year. Additionally, fewer homes are selling above their list price, at only 22%, down seven basis points from a year earlier.
Active inventory in January stood at 1.11 million homes on sale nationwide, a 6% year-over-year increase, though a 0.1% downtick from December. While buyers have more options, the flow of new listings remains constrained. New for-sale listings totaled 269,922 in January, down 5.5% from the same month last year, but up 55% from December.
“The housing market is entering 2026 after three very low-volume years, where transactions have bounced along the bottom,” the report states. “The 2026 forecast for both sales and affordability is one of gradual improvement.”
