The real estate market in Lawrence, KS is about to get weird! The past several years have been relatively easy to predict. My predictions for 2025 ended up being fairly accurate. This year will not be so easy. There are x-factors that could affect the market over the next several months.
Interest rates are going to play a bigger part in 2026 than the past several years. Already, rates were lower in January than they have been for over 3 years. The lower the rate, the higher the demand for housing. The lower the rate, the more the "lock-in" effect loosens our tight inventory. What that means is, there are many homeowners who have been resistant to selling because doing so meant trading a 2% interest rate for a 7% interest rate. Lower rates make it easier to list and move. This year, lower rates mean more listings AND more buyers.
How does this shift affect supply? More homes available for sale will only result in a drop in home values if supply exceeds demand. Lower rates mean buyers have more buying power. Locally however, many sellers will also be buyers, and there will continue to be more demand than supply. If rates go down substantially, then buyer activity will increase substantially. How substantial will determine what happens in Lawrence. Due to a change in leadership at the Federal Reserve, I expect there will be new pressure to lower interest rates . Overall, if interest rates drop to 5.0% or below, demand will soar and home values will begin a very steep incline.
All of my following predictions could end up being drastically off based on everything I've already said. If rates do not drop, my numbers will appear very aggressive. But either way, the market should see hot activity this year. Let's dig in to my predictions for 2026!
Home Sales: A year ago I talked about how the sales inside Lawrence had dropped below 1,000 home sales in a calendar year for several years. While I predicted correctly that there would be more homes sold in 2025, I stopped short of predicting more than 1,000 sales. I said we would get close, but see about a 2-4% increase in sales. We ended the year with 996 home sales inside Lawrence according to the Lawrence MLS, which was roughly a 7% increase.
Prediction for 2026:
In 2026, we will blast past 1,000 home sales in Lawrence. We will see an increase in sales somewhere between 9.0% and 12.0%!
Home Values: Home values increased over 5% in 2025, just above the upper bound of my prediction for the year at 4%. At the time, I felt my prediction of 2-4% was a relatively safe bet. A year later, I'm not in the mood for safe bets.
Prediction for 2026: Home values will increase between 11% and 13% by the end of the year.
Time-on-Market: A year ago I predicted 26 days on market would be the average time spent on the market in Lawrence. The result? The average days on market last year was 25! The last two years have been relatively flat, so what will happen to time on market this year?
Prediction for 2026. I'm not predicting an increase this year in time on market. It will drop below 3 weeks and end the year at 17 days on average.
Interest Rates: Many prognosticators have been predicting a drop in interest rates for years. Last year I was not optimistic for any rate relief by the end of the year. However, they did come down and as I stated previously, we're entering the new year at the lowest rate environment seen in several years. Of course, as I've already stated, I think there's more volatility coming our way. But that unpredictability will likely trend downward rather than upward.
Prediction for 2026: Interest rates will decline at some point in 2026, but they will not dip below 5.0%. Rates of 5-6% will define the year. If they drop below 5%, all bets are off.
New Construction: Not much to talk about here. There may be a light on the horizon, but that horizon is beyond the current year.
Prediction for 2026: Don't look for any major developments to address housing supply this year. Even if a development breaks ground, it's effects will not be seen until 2027 and beyond.
Housing Affordability: This is the broken record at this point. Everything I've said above makes housing affordability worse in 2026 than any prior year. Lower rates will help, but that help will likely be entirely offset or exceeded by an increase in demand.
Prediction for 2026: If you still had any left, you can abandon all hope for affordability relief in 2026.
General Predictions: It's going to be a bit of a wild ride this year. It's going to be interesting if nothing else. Keep an eye on my monthly market updates and I'll keep an eye on as we go.
If you're interested in selling this year, listing with R+K Real Estate will save you a ton of money. As the only brokerage we know of who aggressively negotiates commission, we produce results and continuously save our clients many thousands of dollars! Find out more on our Home Seller Services page.
Thinking about buying a home? We can help you there too. Our ability to negotiate commission gives us a huge advantage over other Realtors. Find out more on our Home Buyer Services page.
And of course, stay tuned to our monthly Lawrence Market Updates to find out how well I do on my predictions as the year goes on!
-Ryan Desch, Broker/Owner R+K Real Estate Solutions
