Where We Stand as of Q3 and Our Outlook for 2026

King County Snapshot

The absorption rate, as measured by months of supply (rate of closed sales versus active inventory), for the single-family market got up to 2.4 months in September - a slight seller’s market and only 0.3 months away from the highest level since the recovery from the great recession - 2.7 months in September 2018. The 2025 median sale price is $1,050,000, up 3% year-over-year. The Seattle Metro market had 8% appreciation, whereas the Eastside saw 3%. Total active inventory is up 37% year-over-year, but still below pre-COVID levels, keeping our market tighter than most.

Fed Policy & Mortgage Rates

The Fed has begun an easing cycle, and the relationship (basis point spread) between the 10-year treasury yield and 30-year mortgage rate is normalizing - a sign investor confidence is improving. Rates briefly dipped to 6.13% in mid-September, triggering a 30% week-over-week surge in purchase application volume, illuminating eager demand.

Inflation & Outlook

Latest Core CPI (3.1%) and Core PCE (2.9%) are still above the Fed’s target of 2% but moderating - not accelerating out of control. If you strip away the Fed’s lagging shelter cost data, what’s known as “harmonized CPI,” Core CPI would be closer 2.7%. Meanwhile, the Trump administration’s economic team is actively pushing policies aimed at lowering Treasury yields — a direct link to lower mortgage rates. If successful, we’d see additional relief with mortgage rates, inevitably creating more demand.

Expert Perspectives

• Ali Wolf (Zonda): Lower rates could add millions of buyers back to the market.
• Robert Dietz (NAHB): Housing starts are down 7% but expects strong demand if the 10-year Treasury falls to 4%.
• Jared Franz (Capital Group): Inflation will be three and some change and won’t hit 2%.
• Ivy Zelman: Weak Treasury demand may keep rates “higher for longer.”
• Logan Mohtashami: Pending sales are already hitting multi-year highs.
• Inside the report: how these expert forecasts line up — and conflict — and what that means for 2026.

Scenarios Ahead

The future could range from a pro-housing recovery to a soft landing, sticky inflation, or even a recession. Inside the report: a scenario table that breaks down how prices, inventory, and affordability could shift under each path.