2026 January Housing Market Update

By Matt Stark

Matt Stark is a top 1% REALTOR® in Seattle with over 19 years of experience. A Seattle native, he began his career in 1999 as an investor before transitioning to full-time real estate.

It’s the beginning of February, and we now have most of January’s numbers in. I like to start each month by stepping back and looking at where we are, especially this time of year, because how we begin the year often sets the tone for the spring market.

We started January with 856 active listings in the county. By the end of the month, that number rose to 898. That increase is typical for the first quarter. Inventory usually begins climbing as we move toward spring. What stands out this year is not the monthly increase. It is where we are starting from.

At 898 active listings, we are roughly 30% higher than this same time last year. And last year was about 30% higher than 2024. When I went back and looked at historical data, we are essentially starting the year at 2019 levels in terms of inventory.

After the sharp drop during COVID, when inventory was extremely low and interest rates were historically low, we’ve been slowly climbing back toward a more traditional market cycle. We are no longer operating in that ultra-tight supply environment.

Now, here’s where it gets interesting.

So what does that mean for buyers and sellers as we head into spring?

Inventory is rising from a higher base. Starting the year with more inventory matters because everything that gets listed in March and April is added to this number. If we continue to see new listings come on at a steady pace, we could be looking at a noticeably different supply picture compared to the past few years.

The big question I’ll be watching is whether buyer demand can absorb that additional supply. Inventory by itself is not a negative. It simply creates more balance. But if supply begins to outpace demand, that is when pricing pressure can develop.

Buyer activity is picking up. On the demand side, there is some encouraging data. Mortgage applications spiked in January and reached a three-year high. That is a meaningful number.

For the past couple of years, many buyers have been sitting on the sidelines waiting for rates to come down. Recently, rates dipped into the high fives and are currently hovering around 6%. That move appears to have brought buyers back into the market.

We are also still seeing strong pending activity. Homes are continuing to go under contract at a healthy pace. In fact, we are selling more homes than are currently coming onto the market. That tells us there is real demand out there.

The balance between supply and demand. As we move deeper into the first quarter and into spring, the relationship between supply and demand will be the key story.

If we start with 898 active listings and add significant new inventory over the next couple of months, we need enough buyers to maintain that balance. If demand keeps pace, pricing is likely to stay stable. If supply begins to exceed demand, we could see price growth slow or potentially flatten.

Right now, what we are seeing is neither a crash nor a surge. It looks much more like a normalization. Buyers have more choices. Sellers need to be strategic with pricing and presentation. The market is functioning in a healthier, more traditional way than it has in several years.

I will continue watching these numbers closely as we move toward spring. If you have questions about your specific property or simply want to understand how this data applies to your situation, I’m always available.

You can call me directly at 206-940-4557, email me at matt@mattstarkrealestate.com, or browse available homes anytime at searchhomesnw.com. The more informed you are heading into this market, the stronger your position will be when it’s time to make a move.