A subtle but consequential shift is under way in China's housing market: owners of second‑hand homes are increasingly reluctant to sell, and monthly listings have fallen across major cities since the turn of 2026. The retreat of supply — rather than a sudden surge in demand — is the clearest new signal that the long correction in resale housing may be approaching a turning point.
Listings in Beijing have fallen for four consecutive months since November, with February alone seeing about 3,000 fewer properties put on the market. Shanghai's downturn began earlier: its resale listings have declined for nine months running, and the city's de‑stocking period is estimated at roughly four months by the Iceberg index. Guangzhou and Shenzhen show similar inflection points, and several important second‑tier cities, including Hangzhou, Suzhou, Hefei and Tianjin, are registering comparable shifts.
The change is visible in transaction dynamics as well as listing volumes. Aggressive price cuts that characterised the market in 2022–25 have largely run their course. In neighbourhoods that suffered the sharpest falls, asking and transaction prices have settled into narrow ranges. Notable examples are Vanke's large developments in Guangzhou's Huangpu district and in Nanjing's Jiulonghu area, where prices fell rapidly in past years but have steadied since last autumn at roughly 19,000–20,000 yuan per square metre and around 17,000–19,000 yuan per square metre respectively.
Aggregate data back the case for a bottoming process: China Index Research Institute reports that in January the average second‑hand price across 100 cities was 12,900 yuan per square metre, down 0.85% month‑on‑month — but that decline is smaller than in the previous month. Crucially, the month‑on‑month falls have narrowed across first‑, second‑ and lower‑tier cities alike, suggesting the trend is national rather than confined to a few pockets.
Two mechanics explain why owners are choosing to hold. First, after several years of falls many homeowners have reached a psychological and financial threshold: when a property’s market value is close to or below the remaining mortgage balance, selling can leave the owner worse off than keeping the home. Second, financing costs for owner‑occupiers have declined. In the fourth quarter the average new commercial mortgage rate on personal housing loans dropped to roughly 3.06% nationally, while provident‑fund loans averaged about 2.6%. At the same time rent yields have improved: rent‑to‑price returns in 50 major cities average about 2.08%, and some formerly hard‑hit communities now generate gross rental yields above 3%.
Taken together, lower carrying costs and modest rental returns reduce the incentive to sell at steep losses. The market is therefore seeing a supply‑side correction: those sellers who were most desperate have already exited, leaving a pool of owners unwilling to accept new deep cuts. That undermines the price leverage buyers and intermediaries used in the panic phase and pushes the market toward more balanced bargaining.
The recovery, however, is partial and uneven. China’s housing adjustment differed greatly across cities and neighbourhoods; many districts still have unfinished downward adjustments. Buyers who are trading up are particularly exposed to “double‑hit” risk: selling an older unit that has stabilised or risen while buying into an improving market that then falls. Seasonality matters too — the traditional “little spring” of March–April often crystallises sentiment. If prices hold or tick up through spring, confidence may strengthen; if they do not, the thaw could be short‑lived.
For policy makers and market participants the implication is cautious optimism. A sustained reduction in second‑hand supply would ease downward pressure on prices and reduce systemic risk to banks and developers, but a durable recovery requires continued macro stability, steady credit conditions and benign labour‑market dynamics. The next few months will show whether the market’s faint spring green is the start of a genuine bottoming process or merely a temporary easing of selling pressure.