Lancaster Housing Demand: What Fall 2025 Trends Signal for 2026 (Will Rates Drop Soon?)

Quick take: Lancaster County demand is still strong heading into fall. Prices are up year-over-year, days on market remain ultra-low, and inventory—while improving—is still lean. Mortgage rates have eased to a ~10-month low, and most reputable forecasts point to a gradual glide lower through 2026, not a cliff-drop. That means 2026 could feel more competitive, not less, if inventory doesn’t rise fast enough.

Where mortgage rates are now (and where they’re likely headed)

• Today: The average 30-year fixed sits around 6.56%, the lowest since October 2024, per Freddie Mac’s weekly survey. GlobeNewswireFreddie Mac

• Why rates move: Mortgage rates track the 10-year Treasury yield more than the Fed’s policy rate, which is why they can drift down even without a Fed cut. Barron's

• The 2026 outlook:

  • Fannie Mae’s August forecast expects rates to end 2026 near ~6.1% (and end 2025 around ~6.5%). Think “slow drift down,” not a sudden plunge. Fannie Mae

  • ICE’s latest Mortgage Monitor suggests ~6.3% by early 2026, which would unlock millions more refi-eligible borrowers—an important signal for move-up sellers. Investopedia

Bottom line: Expect mid-6s through fall/winter, with a reasonable path toward low-6s by late 2026 if inflation keeps cooling.

What Lancaster’s fall data is saying

Bright MLS’s Central Pennsylvania report (which includes Lancaster County) shows a still-tight but resilient market:

• Prices: Lancaster County median sold price = $360,000, up +4.7% YoY (July 2025). CTF Assets

• Speed: Median DOM = 6 days (faster than the regional median), which tells you good homes still move quickly. CTF Assets

• Supply: Active listings up ~10.5% YoY in Lancaster County to 612, but months of supply only ~1.47—still a seller-leaning level. CTF Assets

• Pendings/New Listings: July pendings were up YoY, while new listings dipped YoY—a signal that buyer demand is outpacing fresh supply. CTF Assets

Local press tracking LCAR/Bright data reached a similar conclusion: sales steady, prices up, supply still tight as of mid-August updates. Central Penn Business Journal

Seasonally: Lancaster typically sees fewer new listings after Labor Day than in peak summer, which can tighten competition if rates dip and buyers re-enter. Bright MLS notes Central PA inventory is still only about half of 2019 levels, one reason prices continue to set new highs. CTF Assets

Are rates dropping soon—and what does that mean for 2026 demand?

Likely path: a gradual step-down, not a plunge. If we spend fall in the mid-6s, then hover toward low-6s by late 2026, Lancaster demand should strengthen as sidelined buyers and move-up sellers return.

What that could look like locally:

• Buyers: Each 0.25–0.50% dip adds back purchasing power. In a tight-inventory market like Lancaster, that often translates to more offers per home and fewer seller concessions—especially in the $250k–$400k band where demand is deepest. (If inventory doesn’t rise, expect price firming in 2026.)

• Sellers: Lower rates can unlock move-up activity (and refis), increasing both listings and buyers. Well-priced homes in town and popular suburbs should continue to draw multiple offers if DOM stays in the single digits.

• Investors: If rates ease, cap rates can compress faster than rents rise—favors buy-and-hold in neighborhoods with proven rent growth (Lancaster City rows/small multis; Ephrata/Manheim/Mount Joy SFRs). Watch your debt-service coverage if you underwrite to 2026 refi assumptions.

Strategy: What to do this fall (Lancaster-specific)

If you’re buying

1. Get fully underwritten pre-approval (not just a soft pre-qual) so you can move fast when a good listing hits (Lancaster DOM ~6 days). CTF Assets

2. Rate plan: Discuss a rate-float strategy with your lender and keep an eye on the 10-year Treasury on days of major data (CPI, jobs). Small moves can matter. Barron's

3. Be offer-ready: Consider appraisal gap strategies and flexible possession if competition increases when rates dip again.

   • New to the process? Read my First-Time Home Buyer Guide (Lancaster, PA) and PA Grants & Assistance Programs.

If you’re selling

1. Price to the market, not the wish: Low DOM doesn’t mean any price will work. The best-priced listings get the most showings in week one and the strongest terms.

2. Lean into affordability: Promote payment narratives (e.g., with the latest rate quote) and highlight energy/maintenance updates that reduce monthly cost.

   • See my Lancaster Market Update for current buyer behavior.

If you’re investing

1. Underwrite two ways: (a) today’s rates and (b) a conservative 2026 refi (e.g., 6.25%–6.5%). If your deal only works after a big refi drop, it’s too skinny. Investopedia

2. Target renter-magnet pockets: Lancaster City rows/small multis; SFRs near Ephrata/Manheim/Mount Joy amenities.

   • Start with Why Invest in Lancaster County (2025).

What to watch (Sep–Nov 2025)

• Weekly new listings vs. new pendings (does supply keep up with demand?) Bright MLS local snapshots & LCAR monthly stats. CTF Assetslcaronline.com

• Median DOM (staying near a week = competitive). CTF Assets

• Price reductions share (a rising share may hint at buyer pushback).

• 10-year Treasury & PMI prints (CPI, jobs). If yields fall, mortgage rates usually follow. Barron's

• Freddie Mac PMMS weekly to confirm trend direction. Freddie Mac

Related reads on my site

• First-Time Home Buyer Guide: Lancaster, PA (2025)

• PA Grants & Assistance Programs (Lancaster County)

• Lancaster County Market Update: August Recap & September Predictions

• Moving to Lancaster, PA: Pros, Cons, Cost of Living & Best Places

Looking to see what you can afford?

Want a Lancaster-specific game plan (buy, sell, or invest) for this fall and into 2026? Book a quick strategy call and I’ll run the numbers with you.
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