Housing Market 2026

Aloha and Happy New Year,

As we begin 2026, I want to offer a clear, relevant look at where the housing market stands—nationally and here in Santa Cruz—and what early signs are telling us about the direction ahead.

Let’s begin with the national picture:

Mortgage rates have eased off the peak.
 The relationship between mortgage rates and the 10-year Treasury yield has held true: rates are driven by the bond market, not just headlines. Since the fall, we’ve seen enough softening in rates to improve monthly payment scenarios for some buyers. Confidence responds to even small shifts here, which is why this matters.

Inventory has climbed year-over-year.
 National single-family inventory is up 13.5% compared to this time last year. That’s a step in the right direction and is bringing the market closer to pre-pandemic norms. It also means more choices and less urgency—giving buyers space to be more selective and more focused on affordability.

Sales activity, however, is still low.
 Despite these improvements, existing home sales remain well below historical levels. The market is moving, but not at the pace many remember from previous cycles. That’s why pricing and presentation remain critical—homes that are positioned as a clear value are the ones getting the strongest attention.

Now let’s zoom in on Santa Cruz County:

Last week, 57 homes were withdrawn from the market, while just 7 went pending and 14 entered contract. As of this week, we’re down to just 247 single-family homes and 79 condos/townhomes countywide.

That’s an extremely tight level of inventory for early January—and it reinforces a reality we’ve seen all year: buyers are no longer just buying homes, they’re buying payments. Even reasonably priced properties, especially in the condo and townhome segment, can feel out of reach when the monthly cost of ownership far exceeds comparable rent.

At the same time, many sellers are still sitting tight—not because they don’t want to move, but because they can’t afford to repurchase their own home at today’s prices and rates. That’s created a frozen market in some segments, and opportunity in others.

Looking at early 2026 market signals:

✅ A RE/MAX survey revealed that 88% of buyers plan to purchase this year, showing that demand isn’t gone—it’s waiting.
 ✅ Meanwhile, Zillow data shows 37% more sellers than buyers right now, suggesting that inventory could continue to build unless buyer demand picks up soon.

That imbalance could create opportunities for buyers—especially if mortgage rates continue to trend downward—but it also puts added pressure on sellers to price accurately and present well from the start.

Some Santa Cruz neighborhoods are already moving briskly, while others are slower and seeing more negotiation. The countywide trend is helpful, but real decisions are made at the neighborhood level. If you tell me what zip code or area you're focused on, I’ll send you the most relevant and up-to-date snapshot for that pocket.

If you're considering a move in 2026—or just want clarity on what your property could do in this market—reply to this email. I'm happy to walk you through it.

Guiding you home with Aloha — not just opening doors, but opening the right doors.

Warmly,
 Kalani
 Realtor® | The Spirit of Aloha Real Estate

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