Upstate House

Hudson Valley real estate numbers continue to reflect a slight cooling of the feverish conditions that have had the region sizzling for the past several years, but tight inventory and rising prices continue to vex prospective buyers, and a seller’s market still prevails, especially in high-profile towns like New Paltz, Kingston, and Rhinebeck. Active listings still turn over fast, with homes in New Paltz, for example, selling after a median 32 days on the market with a median listing price of $792,000, while those in neighboring Rosendale sold after 25 days at a median listing price of $525,000.

Dylan Taft, principal broker and owner at New Paltz-based Taft Street Realty, says there is, in fact, a gradual loosening trend. “Compared to this time last year, I think right now the market in the Hudson Valley continues to show signs of a slow cooling. While some homes are still flying off the shelf, and while there are still multiple-offer situations, on average it feels like things are softening, albeit at a very slow pace.”

This mirrors the national trend, with the National Association of Realtors reporting “mild” downward fluctuations across the country. Buyers are getting a bit choosier; sellers need to keep their expectations in line with reality. Taft thinks that’s a good thing. “It’s a healthier trend in many ways, because we need seller expectations on pricing to adjust down to better align with buyers’ growing reluctance to pay higher and higher prices, especially at these higher rates.” he says.

Inventory Is Loosening…Sligtly

Time on market is lengthening slightly, price reductions are becoming more commonplace, and inventory is loosening just a tiny bit. But that doesn’t mean first-time buyers, or those in search of affordable options, are having an easy time. Interest rates remain high compared to a few years ago, and sellers with locked-in rates closer to three percent remain reluctant to consider moving and taking on a fresh mortgage that’s closer to seven percent. But even seven percent is a bargain compared to 1980s rates, which peaked at above 16 percent, and Taft says that many buyers are adjusting their expectations. 

“Buyers are slowly coming to terms with rates staying ‘higher for longer’ and also getting adjusted to lower inventory/turnover of homes year to year,” he says. “Since the beginning of 2026, the biggest change is the trend in interest rates. In 2025, there was a lot of talk of inflation being under control, possible recession on the horizon, and fears that stock markets were overvalued, all of which would add downward pressure on rates. But so far in 2026, we’ve seen the opposite. Inflation fears came back with the war in Iran, bringing higher mortgage rates as a result. Tech and AI spending fueled the stock markets, and the jobs market seems to be holding up well so far this year. All of these things added upward pressure on mortgage rates.”

This locked-in situation for people who might otherwise look to sell and move up, downsize, or simply move to a preferred community—all things that were much easier to do before the pandemic—is slowing the recovery of inventory, which was basically wiped out during the pandemic and immediately afterward. Meanwhile, the Hudson Valley hasn’t any gotten less desirable; people may no longer be fleeing the metro area in a panic, but our open spaces and slower pace remain a strong draw for many, and second-home sales continue to be strong. And single-family housing construction starts remain constrained by overall inflation, impacting the costs of fuel and materials, although adaptive reuse projects are thriving in cities. Building a custom home in the Hudson Valley currently costs between $600 to $700 a square foot. 

In Dutchess County, according to Redfin’s statistics for the three-month period that ended last May, prices year-over-year were up by over 10 percent, to a median sale price of $518,445 and median days on the market were down to 36. The intensity may be fading just a bit, but that’s relative.

Construction Costs Disincentivize Building

It remains to be seen whether zoning reform—recently accomplished in Kingston and Poughkeepsie, and undertaken in quite a few smaller towns—and statewide measures included in Governor Kathy Hochul’s “Let Them Build” initiative will have a noticeable impact on supply, and thus on prices. Taft says moves in that general direction may eventually help. “Locally and at the state level, perhaps there are ways to incentivize local builders to add new construction inventory,” he says. “To do that we need less restrictive zoning laws and lower labor and material costs. Until we get the cost to build down, it will be challenging for local and regional leaders to find ways to improve local housing and affordability issues.”

There’s a measure being discussed at the federal level that he believes might have a positive effect on inventory by encouraging reluctant sellers to jump on in. “I’ve heard recently about a push to increase or doubling of the capital gain exclusion on home sales,” he says. “To me this makes sense. We need ways to unlock supply rather than increase demand and this feels like a way to do it. Many sellers simply won’t sell because of the huge capital gains tax liability they’d face. I think it also makes sense because the existing limits have gone unchanged for many decades, and certainly have not kept up with inflation over all that time.”

So how does one seeking an a house in the region approach the matter strategically? Taft says patience and flexibility are key. “My advice for any buyer right now is to be patient, be confident in your financial abilities, be flexible/willing to compromise, and be ready to pounce if and when the right opportunity comes up,” he says. “I always say nothing has to be permanent or forever, and rather than hold out for the dream home that never comes, maybe buyers need a stepping-stone home, something that get you settled in the area, something that meets most of your needs and wants, and then remain open to the possibility of trading up in the future.”