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This annual wrap-up looks back at how the housing market performed in 2025 and looks forward to what we expect in 2026.
This wrap-up has three sections: basic market trends, a deep dive into prices, and the growing tale of two housing markets shaped by income, equity, and affordability.
Put this data to work.
Market Fundamentals
Sales and listings had a moderate rebound in 2025. We expect that to continue in 2026.
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Statewide closings grew by 2% in 2025 over 2024 to 80,107; these homes sold for a median price of $266,700, 5% above 2024.
There’s a straightforward explanation for this upturn in sales – lower mortgage rates and higher inventory.
New listings rose 5% from 2024 to 2025, reaching 101,385. Inventory entered the year well above 2024 levels, lifting average daily supply to nearly 16,000 homes—20% higher than in 2024 and the highest level in five years, just below 2019.
Homebuyers took advantage of more options and also more favorable borrowing conditions. Rates fell below 2024 in late February and new pending sales jumped into positive year-over-year territory starting in March.
As these contracts were finalized at the closing table, final sales edged ahead of 2024 two months later in May; from May through August, closings were up 5%.
Overall, the 52-week average mortgage rate for 2025 was 6.59%, a modest improvement from 2024 (6.72%); rates were also consistently lower from March through July – taking advantage of prime homebuying months – before dropping even further to close the year.
We project 3% sales growth in 2026, with sales matching 2025 through spring and beating last year during peak summer months.
We based our projection on Wells Fargo's 6.2% interest rate forecast. NAR expects rates to fall to 6.0% and MBA expects 6.4%.
Who are our Home Sellers?
Last year’s positive listing trend was driven by higher-priced homes: While total listings climbed 5% from 2024 to 2025, listings below $250,000 dropped 2% and properties listed above $350,000 grew 12%. (Homes priced above $750,000, while making up less than 5% of total listings, increased 17% year-over-year.)
This suggests homeowners with significant household wealth and home equity deciding to move in greater numbers in 2025 despite the continuation of 6.5%+ mortgage rates.
New listings had fallen 10% from 2022 to 2024 as existing homeowners were frozen in place to protect their pre-2022 mortgage rates. In 2025, we saw the market begin to thaw from the top down.
What about Buyers?
Most sellers are buyers, so 2025 sales trends by price category look very similar to listings: Closings below $250,000 dropped 5% year-over-year while sales above $350,000 increased 11%; sales above $500,000 were up 14% versus 2024.
This data suggests more repeat buyers and fewer first-timers driving sales in 2025. (There’s more evidence of diminished demand at ‘starter home’ prices: Homes sold below $250,000 stayed on the market four days longer in 2025 than in 2024, while homes above $350,000 took just two more days to go under contract.)
Selling and Buying in a More Balanced Market
Home prices continued to rise and inventory remained tight by traditional standards (below three months of available inventory all year) in 2025. But homebuyers still gained bargaining power and sellers had to adjust to a more balanced market with supply at a five-year high.
Homes took 21 days to go from listing to pending, about four days longer than 2024, and the slower pace prompted more sellers to rethink price expectations: The share of total inventory with a price reduction since list ran consistently higher than 2024, peaking near 53% in mid-November.
Sellers ultimately accepted about 95.6% of their original listing price in 2025, roughly a half-point less than in 2024.
Prices
Price growth is moderate but still postive. We tease apart how much price growth is impacted by real appreciation or by a changing mix of homes for sale.
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Overall, the median sale price of $266,700 was 5% higher than 2024. Price grew rapidly — 10.5% annually — from 2018–2022, but growth slowed to a 4.2% annual average from 2022–2025.
Price growth reflects two forces: how fast prices are rising and how the mix of homes being sold is changing.
Next, we tease those trends apart.
While sales fell for homes under $150K and were nearly flat from $150K–$249K, most higher price segments grew 13%–19%. As a result, statewide sales growth was driven by homes above the median price—markets that tend to be more competitive and may favor REALTORS® with deeper market knowledge.
Price per square foot rose 4% from 2024 to 2025, but part of that reflects a shift toward higher-priced homes, which naturally cost more per square foot. Looking within price segments, most saw more modest gains of about 2%–3%. The difference between the 4% price per square foot change and 5% median sale price change also suggests larger homes being purchased, which also tend to be more expensive.
The typical seller at the end of 2025 received an annualized appreciation rate of 6.0%, based on a synthesis of real price change tracked in a sample of 431,000 repeat sales across two decades. This underlines that, while price growth is more moderate now, sellers are still realizing strongly positive returns. Growth is lower, but prices aren’t; homeowners continue to build equity from appreciation, just at a slower rate.
Generally, the longer you owned your house, the higher you annualized appreciation rate was at the time of sale. After 1–3 years, sellers received 4.7% annual price growth. Sellers who owned 7–10 years got the highest returns, at 7.2%.
That segment has grown by 56% since 2019. These are repeat sellers who have gained equity throughout the pandemic and can use that to weather higher rates. On average, these sellers have gained $122K in equity based on the difference between their buying and selling price.
There are 383,000 Indiana households who moved 5-9 years ago, which is the closest available category. (ACS)
We project sale prices will grow 3.0%-3.5% in 2026 and could peak over $290,000 in early summer when measured on a weekly basis.
The fundamental rate situation is unlikely to improve significantly enough to bring in more 1–3 year owners, so 4–6 year and 7–10 year owners are the key segments that will fuel sales and listings. A similar pool of sellers-turned-buyers should mean more moderate change in median sale price – closer to price per square foot appreciation.
Diverging Markets
With rates and prices up, higher-end buyers with equity are still participating in a growing, competitive market, while first-time buyers are on the sidelines.
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Listings over $250K grew from 46% of listings in 2021 to 58% in 2025.
Some of this change is driven by a shift in who can afford to participate in the market.
Higher rates have helped to drive the median payment from $1,240 at the end of 2021 to over $2,000 at the end of 2025. Buyers with higher incomes can cover the cost of more expensive mortgages, and those with more equity can reduce the size of their loan.
47% of listings are affordable to a household earning $75K. That's 40 points lower than Dec. 2020, but two points higher than last year, thanks to lower interest rates.
Inventory grew by 20% this year. 78% of that growth was from homes listed at $250K or higher. Half was from $350+.
For homes below $250K, the sale-to-list ratio was 96.9%, down a point from last year. But for homes $250K or higher, the ratio was 97.9%, about the same as last year. Higher priced homes are more competitive, and sellers are not losing as much leverage over time.
Lower rates help qualify more buyers even when prices are rising: Despite rising prices, lower rates kept the median monthly payment for a home purchase at $1,970 to end the year. That's $5 lower than Dec. 2024.
If rates stay at 6.2%, we will probably continue to see a moderate rebound in sales.
But if they drop to 6.0% or lower, as Mortgage Bankers Association and NAR think they may, this could significantly expand the pool of buyers, according to NAR analysis.
More Leverage for Buyers
While inventory is still lower compared to the past decade, signals like price drops and sale-to-list price point to a buyer friendly climate.
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Homes sold for 95.6% of asking price in 2025. For comparison, that's exactly the same ratio as 2017, a year when we averaged three months of inventory compared to only two months in 2025.
An average of 46.5% of listings had dropped their price at some point across 2025. That's almost three points higher than 2024. This contributed to the lower sale-to-list ratio — we measure that from the original listing price.
13.2% of pendings fell through in 2025, compared to 13.7% in 2024. Despite a more buyer-friendly market, pendings were slightly more likly to close. Overall, the failed sale rate changes little from year to year, but closing a deal takes more work in slower markets — buyers are less likely to make as-is offers, and REALTORS have more to coordinate and negotiate.
The delisting rate, a measure of listings that end without a sale, climbed from 17% in 2024 to 20% in 2025. While conditions were more buyer-friendly, elevated delist activity reflects growing seller fatigue and the added difficulty of completing deals in a slower, more negotiated market.
Experience matters more this year.
Contracts are still closing at similar rates, but more listings are failing to attract viable offers, making skilled REALTORS® essential in a slower, more selective market. At the right price, listings still attract offers and are just as likely (if not slightly more likely) to close than last year, but mispriced homes can linger, raising the importance of experienced negotiation.