January 10th, 2026 9:46 AM by Sam Kader NMLS# 130505
As the Seattle-area housing market moves into 2026, buyers, homeowners, and real estate professionals are navigating a landscape shaped by high home prices, easing—but still elevated—mortgage rates, and shifting demand across different property types.
While borrowing costs have moderated from recent highs, market data shows that affordability challenges persist, especially in higher-cost areas of the Puget Sound region.
Data from the Northwest Multiple Listing Service (NWMLS) shows that the Seattle-area housing market ended 2025 with more listings but slower buyer activity. New listings increased year over year in several counties, including King and Kitsap, yet pending sales declined in many of those same areas.
Local housing researchers summarize the issue clearly: there may be more sellers than a year ago, but many buyers still cannot make the numbers work financially.
Home prices remain a key factor. Median single-family home prices stayed elevated across much of the region, particularly in King County and Seattle proper. While Snohomish and Pierce counties saw modest price declines, overall affordability pressures remain high relative to incomes.
Lower mortgage rates alone have not been enough to meaningfully boost sales activity.
Nationally, mortgage rates have declined modestly compared to a year ago and have settled into a relatively narrow range entering 2026. After several years of volatility, rates are now closer to long-term historical norms than the unusually low levels seen during the pandemic.
Market analysts note that mortgage rates are influenced less by any single policy decision and more by broader forces, including inflation trends, bond market conditions, Federal Reserve policy expectations, and labor market strength.
Most forecasts suggest rates may improve gradually, but large or rapid declines are unlikely without sustained changes in economic conditions. As a result, many buyers are shifting their focus away from timing the market and toward planning within today’s realities.
Seattle-area agents continue to report uneven conditions: some buyers are negotiating seller concessions or price reductions on less desirable homes, while other buyers are encountering competition and bidding wars in select neighborhoods, particularly during seasonally low inventory periods.
Condominiums remain a challenging segment. High HOA dues, aging buildings, and changing buyer preferences have weighed on condo demand, especially outside core urban areas. In some cases, sellers are preparing to list condos for less than their original purchase prices from a decade ago, depending on location, condition, and association factors.
As mortgage rates have eased from recent highs, interest in rental property investing has begun to increase, particularly among buyers focused on long-term cash flow rather than short-term appreciation.
Lower borrowing costs can improve cash-flow calculations for investors compared to earlier periods, making rental purchases more viable in certain scenarios. At the same time, high home prices and limited inventory continue to support rental demand across many Washington markets.
That said, financing realities remain important: mortgage rates for investment properties are typically higher than primary residence rates, and terms depend on down payment, credit profile, reserves, and property type. As financing becomes more favorable, competition for well-located rental properties may increase.
In Seattle and across Washington State, mortgage rates are only one piece of the affordability equation. Home prices, property taxes, insurance costs, and loan size all play meaningful roles in monthly housing expenses.
Limited inventory continues to define the local market. Many homeowners remain reluctant to sell after locking in historically low rates in prior years, which has constrained supply and supported home values—even as buyer purchasing power has been pressured.
For many households, decisions are increasingly shaped by lifestyle needs, stability, and long-term plans, rather than waiting for a specific rate threshold.
The following observations are general in nature and may not apply to every situation:
For buyers: Affordability remains tight, and patience and flexibility continue to matter. Expanding search areas, considering different property types, and focusing on sustainable monthly payments may be more productive than waiting for headline rate changes.
For homeowners: Rising inventory and cautious buyers mean pricing, preparation, and timing matter. Refinancing or equity strategies may still make sense in some cases, but should be evaluated based on individual goals rather than expectations of sharply lower rates.
For investors and Realtors: Easing rates and strong rental demand are renewing interest in investment properties. Education, realistic cash-flow analysis, and long-term planning remain essential as competition increases in desirable rental markets.
Today’s housing market rewards planning over prediction. Whether you’re buying, investing, refinancing, or simply reviewing your options, understanding how local prices, financing structures, and long-term goals intersect is often more valuable than waiting for the market to change.
If you’re unsure which mortgage option fits your situation, the next step is often a conversation—not a rate quote or loan commitment. Reviewing your goals, timeline, and documentation helps determine the most appropriate loan path.