Homebuying is cheaper than renting in most U.S. counties

A functional, unstuck market

For the first time in a while, the housing market feels less stuck and more workable.

Buyers are coming back, sellers are re-engaging, and pricing is starting to make sense again, even if conditions still vary widely by locale.

Add in the fact that buying is cheaper than renting in most U.S. counties, and the picture becomes clearer: this isn’t a boom, but it is a market that’s starting to function again. 

For agents, that means opportunity, especially for those who stay disciplined and proactive as activity picks up.

Let’s dive in.

- David

Housing market momentum is growing

Momentum is building in the U.S. housing market. Buyer demand is strengthening, inventory is rising, and prices are stable – clear signs that the housing environment is far more functional and balanced than last year. Here are the key trends to know:

• Buyer demand is building: Weekly pending home sales climbed steadily in January, reaching 56,252 by Jan. 23, with consistent week-over-week and year-over-year gains.

• Mortgage applications confirm the trend: Purchase applications rose 5% week over week and 18% year over year, reinforcing near-term demand momentum.

• Rates near 6% appear supportive: Historical patterns suggest demand improves as mortgage rates approach 6%, a dynamic that may finally be reemerging in 2026.

• Inventory continues to grow: Active listings increased to 697,868, with year-over-year growth moderating but remaining at healthier levels than 2022–2024.

• New listings are picking up: 53,920 new listings came to market last week, above the same period last year, signaling more sellers are reentering the market.

• Prices remain stable: The median list price held at $419,900, roughly flat year over year, while 33.6% of listings saw price reductions—unchanged from historical norms.

• Market conditions are active, not overheated: The Market Action Index registered 35.1, and absorption continues to outpace new listings, suggesting efficient transaction flow.

• Key variable to watch: Mortgage rates remain the primary swing factor, with future demand dependent on rates staying near current levels into the spring.

My take

What stands out in this data isn’t a housing boom; it’s a return to functionality. Demand is improving as mortgage rates stabilize near levels that historically bring buyers back, while rising inventory is finally giving that demand somewhere to go. Prices holding steady amid higher listings suggest this is a market that’s finding balance, not overheating. The big question now is rates: if they stay near current levels into spring, this early momentum has a real chance to translate into stronger transaction activity in the months ahead.

The most affordable counties for owning a home in 2026

Owning a home is cheaper than renting a three-bedroom house or apartment in a majority of U.S. counties. According to ATTOM, of the 364 counties they analyzed, homeownership was more affordable in 57.7% of them, based on the share of average local wages needed to cover ownership costs.

Regionally, the Midwest stands out as the most buyer-friendly part of the country, while affordability breaks down sharply in Western states. In the Midwest, buying was more affordable than renting in 81.5% of counties, compared with 66.3% in the South. That drops to 48.8% in the Northeast and just 16.9% in the West.

Here are the counties where owning a home is most affordable, ranked by the percentage of average local wages needed to buy a single-family home:

1. Peoria County, Illinois: 14.5%

2. Wayne County, Michigan: 14.9%

3. Mobile County, Alabama: 15.1%

4. Jefferson County, Alabama: 16.3%

5. Montgomery County, Alabama: 16.7%

6. Saint Louis City County, Missouri: 17.3%

7. Jefferson County, Texas: 17.4%

8. Delaware County, Indiana: 18%

9. Richmond County, Georgia: 18%

10. Bibb County, Georgia: 18.8%

My take

The Midwest and much of the South continue to offer a rare combination of modest home prices and wage levels that make ownership workable, while the West remains structurally out of reach for most buyers. For agents, this reinforces a key reality of this cycle: affordability is now highly regional, and markets where ownership costs stay below 20% of wages are likely to see steadier demand than those where renting still undercuts buying.

Metros with the highest home purchase cancellation rates

40,000 U.S. home-purchase agreements were canceled in December, equal to 16.3% of homes that went under contract that month. That’s up from 14.9% a year earlier and marks the highest December cancellation rate on record, based on Redfin data going back to 2017.

Here are the markets where home purchases fell out of contract the most and the least, as a percentage of overall pending sales.

My take

Rising cancellation rates show buyers finally have leverage, and they’re not afraid to use it. As inventory builds and sellers outnumber buyers in many markets, more deals are falling apart during inspections, sometimes because of real issues, other times because the monthly payment just doesn’t feel worth it anymore. It’s also important to remember that many of these December cancellations trace back to contracts signed weeks earlier, under tougher rate and pricing conditions. That backdrop is starting to improve, though: mortgage payments have eased, price growth is cooling, and affordability should gradually get better in 2026 as wages catch up.

Schematics

The news that just missed the cut

• Why the Fed is unlikely to cut interest rates at its next meeting

• The strategies top agents use but don’t tell you

• These developers stand to win in Trump’s housing-investor crackdown

• How to generate more “Come list me” calls 

• New California law means big changes for photos in real estate listings 

Market reports that are designed and proven to win more listings are one click away at altosresearch.com. Altos provides you with deep insights on any ZIP code, city, state, or metro to close more deals. Built for agents looking to use data to dominate the market.

Foundation Plans

Advice from David to win the day

Lead generation is the lifeblood of every real estate business. Without a consistent flow of new prospects, even the best agents eventually hit a ceiling. That’s why agents must make lead generation a daily discipline. It’s also why we’re doing a deep dive into the process. 

In addition to the tips we detailed last week, here are four more tips to help you simplify and systematize your approach.

1. Have a clear vision of who you are prospecting – Before you can start making calls, you need clarity on who you’re targeting. Are you focusing on your sphere of influence, expired listings, FSBOs, circle dialing, or old internet leads? Each group requires a different script and strategy, so defining your “who” ensures your efforts are focused and intentional. Without this, you risk wasting time on vague outreach that rarely produces results.

2. Prioritize lead generation by putting it on your calendar – If it’s not on your calendar, it doesn’t happen. Blocking out daily or weekly windows dedicated solely to lead generation is non-negotiable. This commitment not only creates consistency but also eliminates the temptation to get distracted by non-income-producing activities. Treat your prospecting time as sacred—just like an appointment with a client.

3. Prepare in advance – Great lead generation is about preparation, not improvisation or thinking on the fly. Know what scripts you’ll use, anticipate the objections you’re likely to hear, and practice your delivery so that your confidence comes through. Lazy follow-ups like “just checking in” won’t cut it. Your outreach should always be purposeful, value-driven, and backed by a clear message. Plus, you’ll be surprised: the better you prepare, the better you’ll think on your feet. 

4. Build in accountability – Lead generation is easier to skip when no one is watching. That’s why accountability is crucial. Whether it’s a peer, a coach, or even a family member, find someone to report your numbers to consistently. Having to own up to your results—good or bad—creates the pressure needed to stay consistent and hit your goals.

Just in Case

Keep the latest industry data in your back pocket with today’s mortgage rates:

"Be so focused on your own ambitions that no one can distract you from achieving them." – Kobe Bryant

We know this business is tough, friends. But don’t let that stop you. Success takes work — real work. If you want to be great, you have to care. You have to obsess. Set aside the distractions and stay focused.

- David