As we head into the final month of the year, the real estate market typically slows down, but according to new reporting from HousingWire, December’s housing data may offer the earliest clues about what to expect in the 2026 market. Historically, December wasn’t a month experts watched closely, but post-COVID patterns have shifted. Forward-looking demand signals now appear earlier, offering valuable insight long before the spring market arrives.
At Pearlman Meekin & Co., we pay close attention to these trends to help our clients in Bethesda, Potomac, Rockville, and across the DC Metro Area make informed decisions. Here’s what this month’s data is telling us.
1. Mortgage Rates Are Hovering Near 6% And That Matters
HousingWire reports that mortgage rates have recently settled near the lower end of their 2025 forecast range (5.75%–7.25%), thanks to softer labor data and Fed rate cuts. The 10-year Treasury yield, a major driver of mortgage rates, is also sitting near year-to-date lows.
Why this matters:
Lower rates in December could mean a stronger start to 2026, especially if rates continue to stay close to 6%. Even adjustable-rate mortgages (ARMs) may drop below 6% heading into next year, something buyers haven’t seen in several years.
What to watch:
The upcoming Federal Reserve meeting. If Fed Chair Jerome Powell adopts a hawkish tone, rates could temporarily rise, but if the 10-year yield stays near 4%, rates should remain favorable.
2. Mortgage Spreads Are Stabilizing
One of the under-the-radar factors shaping affordability this year has been the improvement in mortgage spreads - the difference between mortgage rates and the 10-year Treasury yield.
HousingWire notes that spreads are almost back to normal after being unusually elevated in 2023. That improvement alone has kept mortgage rates close to 6%.
If spreads return to their historical range:
Rates could fall another 0.39% to 0.59%, pushing mortgages into the mid-5% range.
3. Purchase Application Data Is Strengthening
Even more telling: when mortgage rates fall below 6.64%, demand increases and we’re seeing that now.
According to HousingWire’s data:
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10 positive weekly purchase app reports since rates dropped below 6.64%
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17 weeks of double-digit year-over-year growth
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A year-to-date high in purchase applications last week
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43 straight weeks of year-over-year gains
This is one of the strongest forward-looking demand signals we’ve seen since before the pandemic.
What it means for DC-area buyers and sellers:
If rates stay near 6% and applications keep increasing, we could be heading into a more active, and healthier 2026 market.
4. Inventory Is Normalizing (Finally)
For the first time since 2020, we’re approaching normal inventory levels. HousingWire notes that sellers no longer hold the extreme advantage they had during the post-COVID “unhealthy market,” and buyers should see more options in 2026.
Even though December historically brings seasonal listing slowdowns, the bigger story is this:
Inventory in 2025 is significantly better than in 2020–2024 and that trend will continue.
For our local markets in Bethesda, Rockville, and Potomac, that means a more balanced landscape between buyers and sellers heading into next year.
The Bottom Line for the 2026 DC Metro Market
HousingWire’s analysis suggests that December data is more important than ever. The indicators to watch closely this month:
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The 10-year Treasury yield
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Mortgage rates staying near 6%
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Purchase applications growing week-over-week and year-over-year
If these trends continue, the 2026 real estate market may start stronger than previous years with more inventory, improved affordability, and renewed buyer activity.
If you’re considering buying or selling in 2026 (or even early spring 2027), we’d love to talk about your goals and help you strategize now. Reach out anytime. Pearlman Meekin & Co. is here to guide you through every market cycle.
