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The state of Connecticut is coming off a positive 2025 year where sellers were able to fetch modest price growth and sales activity amid high interest rates. With mortgage interest rates improving, competition and activity will only increase, observers say. 

In 2025, the median price of single-family homes increased by 6.8 percent to $440,000 on an annual basis in Connecticut, according to The Warren Group, publisher of The Commercial Record. The number of single-family home sales increased by 1.3 percent to 25,800 last year. 

Both Fairfield and Middlesex counties recorded strong price growth and demand in 2025. Middlesex County saw sales increase by 5.9 percent.  

“Some of the golden rules of driving factors in real estate are lots of things are driven by quality of schools, the tax rate in a town, municipal services, recreational services,” Coldwell Banker Realty Northeast Regional President Pauline Bennett said. “So towns that you have attractive tax bases, that have good school systems, that have great municipal services, those towns and Middlesex County is certainly full of those opportunities, are really attracting buyers to them.” 

Improving Mortgage Market Helps

Additionally, buyers have been entering the market thanks to downward interest rates.  The average 30-year fixed-rate mortgage interest rate dropped to 6.01 percent according to the most recent data from The Federal Reserve Bank of St. Louis and mortgage-buyer Freddie Mac. Mortgage rates sat at 6.85 percent at roughly the same time of the year in 2025. 

This has caused the market to shift closer to the center in 2026 and sellers no longer hold as much of an upper hand in negotiations, compared to prior years. 

“I think that it is definitely moving towards a balanced market,” Bennet said. “The sellers have a competitive edge, especially for a competitively priced property in mint condition. The real Covid bump sellers who still think that’s the environment, it would not be uncommon for them to sit on the market. We’re still seeing the list price to sales price ratio getting close to 100 percent but that’s down several percentage points from its all-time high, indicating that buyers, they’re willing to pay a premium, but they’re not willing to overpay on a premium.” 

Buyers are more likely to be able to negotiate on home inspections, CT Realtors 2026 President Alexa Kebalo said, while in prior years they would likely have to waive a home inspection in order to get a home. Buyers are also seeking concessions that they enjoyed pre-pandemic as well as seeking for the seller to pay the buyer’s agent commission, Bennett.  

Demand for More Homes vs. Cold Weather

As interest rates become more favorable, the benefits extend not just to buyers but to sellers as well. As Connecticut struggles with a lack of housing stock, the lock-in effect will become less impactful as interest rates decrease.  

The ultimate key to improving the overall health is adding more homes onto the market, said Kebalo, who is also a Realtor at RE/MAX One in Ellington.   

“We just need more homes in general,” she said. “The more things that we could do to help, whether it’s like the cost of construction, allowing more people to get into the trades because tradesmen are harder to come by now than ever. So looking at things that would help with construction costs, the trades, would really help when it comes to more opportunity of homes being built, which will allow for more affordability of homes and really help make a more balanced market.”  

Short of building new homes, what’s left is getting owners of existing homes to sell. And Connecticut’s inventory struggles have only been exacerbated by poor weather keeping sellers from listing their homes, Bennett said. For the few sellers who are on the market, they have an advantage over sellers who wait until the spring market.   

“Mother Nature hasn’t exactly been cooperative with us and lots of sellers instinctively just kind of say, ‘I’m going to wait to put my house on until the snow is gone or the yard looks better,’ or something along those lines.” she said. “Right now, with sellers holding off because we’ve had a tougher winter than typical, sellers coming on now getting that added benefit.” 

Buyers Still Face Competition

While sellers can no longer list their property seeking well over what it may be worth, buyers are still facing competition for homes, albeit less than in prior years as the market shifts closer to the center.  

“Because it’s still a seller’s market, there is still competition if a home is priced right,” Kebalo said. “We’re still seeing multiple offers, just not quite as many. A buyer that’s on the fence, if you see a home that you’re interested in, consider to make a move because there’s not as much competition right now.” 

But as interest rates trend downward, more buyers could feel comfortable looking for a home or reentering the market after failing to secure a new home in past years. Lower interest rates create more buying power for the average homebuyer.  

“With the interest rates cooling off, it’s helping with the pricing affordability for the average buyer,” Kebalo said. “So it’s going to allow a lot of buyers around the fence to reenter the marketplace, to get a home at a little bit higher price point, but that’s also going to allow for more buyers to have that same mentality. So it will continue to push the buyer demand and also the pricing.” 

Buyer demand will increase heading into the spring, Bennett said. As the Northeast digs out from one of its snowier winters in the last decade, improved weather should bring more buyers out into the market, she argued.

“I think that there’s a lot of pent-up demand that was really a result of Mother Nature and then also a lot of people just sitting on the sidelines waiting for those interest rates to come down just a bit. So buyers are pleased with that, now they’re just waiting for the inventory to come on,”  she said.

The continued increase in pricing is affecting all buyers but first-time homebuyers in particular are feeling the brunt of the affordability crisis. The average first-time homebuyer age is now 40 years old, according to the National Association of Realtors, a fact Bennett said left her stunned.  

The report also noted that coming up with a down payment can be the biggest obstacle for buyers trying to get into the market.

“That’s really the difference,” she said. It’s taking the youth of the country longer to amass that down payment because the debt service they’re fully capable of doing based on their earning power, their jobs, etc. The real limiting factor for that group is the down payment.”