Buyers entered the season with more budget room – but supply still called the shots
Spring 2026 is set up to be the first home-buying season in three years where typical buyers arrive with more room in their budgets than sellers are asking, according to new analysis from First American senior economist Sam Williamson.
In December 2025, the firm estimated national house-buying power at $417,000, about 5% above a $396,000 median list price – a modest surplus, but a sharp turn from recent deficits.
That shift followed a year in which mortgage rates eased from post‑pandemic peaks and affordability slowly improved.
First American’s Real House Price Index showed buying power rising as income growth and lower rates outpaced near‑flat price gains, echoing broader data on stabilizing prices and higher inventory in parts of the country.
At the same time, average 30‑year rates dipped below 6% in late February 2026 for the first time since 2022, offering buyers a rare affordability tailwind heading into spring.
Budgets outpaced sticky asking prices
“Spring break may be arriving a little early for home buyers this year,” Williamson said.
“Late last year, house-buying power surpassed the national median list price for the first time in more than three years, which could support a more vibrant spring home-buying season than in recent years, as more homes fall within buyers’ budgets.”
For most households, the decision to buy hinged less on the asking price and more on whether the monthly mortgage payment fit within their budget, a calculation driven by overall house-buying power
The house-buying power metric estimated how much home a typical buyer could afford by combining median household income, the prevailing 30‑year fixed mortgage rate, and an assumption that one‑third of pre‑tax income went to a mortgage payment with a 5% down payment.
“Because mortgage rates can change quickly, house-buying power and household budgets can also change quickly. List prices, by contrast, tend to adjust more slowly,” Williamson said.
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Supply holds the key to a true rebound
“The increase in sales activity late last year coincided with house-buying power moving back above the median list price nationally,” Williamson said.
“Whether price growth stays contained this spring will depend in large part on how supply evolves relative to demand. If supply remains tight and house-buying power stays ahead of list prices, the spring home-buying season may break out of a three-year slump, even if just modestly.”
Early 2026’s lower‑rate and higher‑buying‑power environment offer a narrow opening to rekindle purchase activity, but the strength of the season still depends on whether more sellers are finally willing to meet buyers halfway on price and product.
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