The U.S. housing market is in a strange spot. Mortgage rates have started to cool off, inventory is rising, but affordability is still tight. Buyers are hopeful, sellers are cautious, and many deals are falling through at the last minute. If you’re planning to buy, sell, or rent in 2025—or wondering what 2026 will look like—this guide breaks it all down.
We’ll cover:
- Why so many home sales are collapsing
- Whether the housing market is struggling
- How much you really need for a good down payment
- If a housing crash could happen in 2026
- Whether rent prices will finally ease
- And if the market is “stuck” until 2026
Why Are So Many Home Sales Falling Through?
In July 2025, nearly 15% of pending U.S. home sales were canceled—the highest July cancellation rate since Redfin began tracking. Deals collapse for three main reasons:
- Inspection surprises – Buyers walk away if repair costs are higher than expected.
- Appraisal gaps – When homes appraise below contract price, financing falls apart.
- Affordability shocks – Rising monthly payments (insurance, HOA, or taxes) spook buyers.
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Is the Housing Market Struggling?
The short answer: it’s not crashing, but it’s not booming either.
- Existing-home sales rose 2.0% in July thanks to slightly lower mortgage rates.
- Active inventory topped 1 million listings—the highest since 2020—but still 13% below pre-pandemic levels.
- Buyers have more options, but many remain priced out.
Think of it as a “thawing” market: better than 2023, still far from affordable.
What Is a Good Down Payment on a House?
Down payment rules vary by loan type:
- Conventional loans – as low as 3% down with Fannie Mae’s HomeReady.
- FHA loans – 3.5% down, great for first-time buyers.
- VA loans – 0% down for eligible veterans.
But what’s considered “good”?
- 20% down is ideal: avoids PMI (private mortgage insurance) and lowers payments.
- 10% down is a strong middle ground.
- 3%–5% down is fine if you have strong income and credit, just budget for PMI.
👉 XLNC Exotic Homes also publishes guides on how much down payment you need to buy in California—great if you’re considering both traditional homes and cash alternatives.
Will There Be a Housing Crash in 2026?
Some buyers are waiting for prices to “collapse.” But experts say a 2008-style crash is unlikely.
- Zillow projects flat to slightly positive prices nationally into 2026.
- NAR economists expect low-single-digit growth, not double-digit declines.
- Strong lending standards today (no subprime boom) mean fewer forced sales.
The risk isn’t a crash—it’s regional slowdowns in overbuilt or overheated markets.
Will Rent Prices Go Down in 2026?
Rents dipped in late 2025 as new apartments hit the market. But here’s the catch:
- Supply boom is temporary. Many projects started in 2022–23 will be finished by 2025, then construction slows.
- Vacancies could tighten in 2026, pushing rents higher again.
- Coastal metros (NYC, L.A., Bay Area) are still pricey; Midwest and South remain more affordable.
If you’re renting now, lock in a longer lease in 2025 to hedge against possible increases.
Is the Housing Market Stuck Until 2026?
Not stuck—just moving slowly. Key shifts:
- Mortgage rates fell to ~6.5% in September 2025 (an 11-month low).
- Listings are up after 21 straight months of growth.
- Sellers are more flexible, offering concessions and price cuts.
We’ll likely see gradual improvement in affordability, not a quick fix.
👉 Thinking of selling before 2026? XLNC Exotic Homes can help California homeowners sell fast for cash.
Key Takeaways
- 15% of deals fall through because of inspections, appraisals, or affordability.
- The market is thawing—sales and listings are rising, but costs remain high.
- A good down payment is 20% if you can swing it, but 3–10% is doable with programs.
- No 2026 crash expected—flat to modest price growth is more likely.
- Rents may rise again in 2026 after a short dip.
- The market isn’t stuck—it’s adjusting slowly as rates and supply shift.
