As we close out 2025 and reflect on the year in real estate, one thing has become clear: predicting the market—and identifying clean, consistent trends—has been especially challenging. The only true constant this year appears to be inconsistency.

Without a crystal ball (don’t we all wish we had one), here are my key takeaways from the Rhode Island real estate market in 2025—and what they may mean as we head into 2026.

Values: Still Rising, but at a Slower Pace

Home values across Rhode Island continued to increase in 2025, though at a more moderate rate than in recent years.

• The median sale price of a single-family home began the year at $465,000

• As we end 2025, that figure stands at $505,000

• This represents nearly a 9% increase over the course of the year

While we’re no longer seeing the double-digit, year-over-year appreciation experienced during the pandemic years, real estate remains a solid long-term investment in Rhode Island.

A slower pace of appreciation doesn’t signal weakness. It reflects a market normalizing while still building value.

Mortgage Rates: Steady, Not Surprising

Thirty-year fixed mortgage rates continued to hover in the 6% to 7% range throughout 2025.

There’s often significant attention paid to Federal Reserve rate decisions, but mortgage rates are actually tied more closely to the 10-Year Treasury note. For that reason, lenders consistently caution buyers against pinning their hopes for lower mortgage rates on Fed meetings alone. In fact, mortgage rates often trend upward after the Fed cuts rates.

Key context for 2025:

• The Fed cut rates three times, each by a quarter point

• Mortgage rates fluctuated from the high 6% range early in the year to the low 6% range by year-end

• Today’s rates are still well above the historic low of 2.65% reached in January 2021

However, when viewed historically, today’s rates are closer to average than many expect. According to Freddie Mac, which has tracked mortgage rates since 1971, the 50-year average for 30-year fixed mortgages is 7.71%—meaning current rates remain below long-term norms.

Inventory: Slowly Improving, Still Very Tight

Housing inventory in Rhode Island remains well below what’s needed for a balanced market.

• Current inventory sits at under 3 months

• A balanced market typically requires 6 months of inventory

• End-of-year comparisons:

  • 2023: 1.5 months

  • 2024: 1.6 months

  • 2025: just under 3 months

While this represents a slow but measurable increase, inventory is still historically low. For perspective, Rhode Island ended 2010 with 9 months of inventory—a stark contrast to today’s conditions.

What This Means For Buyers in 2026

Buyer activity has not slowed for the holidays. I continue to show homes without interruption, and well-informed buyers understand that this may actually be one of the best windows to buy.

Why?

• Slightly more inventory

• Relatively stable interest rates

• Fewer buyers actively searching during winter months

PRO TIP FOR BUYERS:

Don’t wait for rates to go down. If rates drop, buyers will return in large numbers, putting even more pressure on limited inventory—and pushing prices higher.

What This Means For Sellers in 2026

Sellers can feel confident knowing their home is still “one of the few” available in a low-inventory market. Demand remains strong—but conditions are evolving.

What sellers should expect:

• Homes may sit on the market longer, especially in winter

• Buyers are more analytical and data-driven

• Key metrics include price per square foot and days on market

• Fewer multiple-offer situations

• Buyers are no longer routinely waiving inspections or appraisals

At Homes By Connect, we believe that setting realistic expectations using strong data is the most effective way to position a home to sell at the highest possible price.

PRO TIP FOR SELLERS:

Waiting for “perfect” market conditions can mean more competition. With inventory still limited, well-priced homes continue to stand out—especially when guided by smart data and realistic expectations.

Katy’s Takeaway

As we move into the new year, thoughtful strategy, informed decision-making, and clear expectations will matter more than ever—for both buyers and sellers. We look forward to being your Real Estate Advisors of Choice in 2026!

Now more than ever, it’s essential to partner with an experienced real estate professional who understands local market dynamics. We’re here to help you navigate every step. Let’s connect and talk about your next move. Contact us today for expert advice and personalized support.

Katy Donovan is the Broker/Owner of Homes By Connect and The Donovan Group in Portsmouth, Rhode Island.

Data Points provided by the Rhode Island Association of Realtors®.