The real estate market shows signs of a turning point: first-tier cities stop falling, and new home prices increase in 10 cities.

Market recovery signals are becoming increasingly clear.

This trend is directly reflected in the growing number of cities experiencing rising housing prices. On March 16, the National Bureau of Statistics released data on the sales prices of commercial residential properties in 70 major and medium-sized cities as of February 2026: the number of cities with month-on-month increases in new home prices reached 10, up by five from the previous month; cities with month-on-month increases in second-hand home prices totaled 2, remaining unchanged from January.

Additionally, according to data on the basic situation of the national real estate market from January to February released by the National Bureau of Statistics, the year-on-year growth rate of the area of real estate for sale has fallen to its lowest level in nearly five years, easing inventory pressure.

However, overall, the real estate sector still faces significant challenges. Sales and funding sides continue to experience substantial declines.

From January to February, the sales area of newly built commercial housing nationwide was 92.93 million square meters, down 13.5% year-on-year, a much larger decline compared to -5.1% last year; sales revenue was 8.186 trillion yuan, down 20.2% year-on-year, a sharp decline from last year’s 2.6% increase.

“The decline in the new housing market in January-February is related to the high base last year, the longer Spring Festival holiday, and a record high number of people going out. More importantly, after four years of significant adjustments, supply has actively contracted at the source, and the supply-demand relationship in the new housing market is beginning to balance. Inventory growth has stopped, and the turnover cycle in hot cities has generally shortened to within 18 months,” said Li Yujia, Chief Researcher at the Housing Policy Research Center of Guangdong Urban and Rural Planning Institute.

First-tier cities lead the stabilization

Whether in new home prices or second-hand home prices, the month-on-month decline rates are narrowing. This indicates that, with the turning point of the housing price index, the real estate market is truly beginning to bottom out and recover.

Looking at the new housing market, in February, the price index of new homes in 70 cities decreased by 0.3% month-on-month, narrowing by 0.1 percentage points from January, marking the fourth consecutive month of narrowing decline.

Among them, first-tier cities led the stabilization. In February, the month-on-month decline in new home prices in first-tier cities shifted from 0.5% in January to 0.1%, the first such turnaround since May last year. Beijing and Shanghai saw new home prices rise by 0.2%, Guangzhou remained flat, and Shenzhen declined by 0.3%.

Second-tier cities saw a month-on-month decrease of 0.2%, narrowing by 0.1 percentage points, with declines narrowing for two consecutive months; third-tier cities’ declines remained unchanged from last month.

A very direct positive signal is the significant increase in the number of cities with rising home prices. In February, among the 70 large and medium-sized cities, 10 saw month-on-month increases in new home prices, up by five from January.

Among these, Changchun, Nanjing, and Yichang led with a 0.3% increase; Beijing, Shenyang, Shanghai, and Hangzhou each rose by 0.2%; Dalian, Xiamen, and Wuhan increased by 0.1%.

“From the characteristics of these cities, those that experienced deeper price adjustments in the past are now seeing continued improvement indicators, which further indicates that cities with solid fundamentals can maintain a good trend in housing prices,” said Yan Yuejin, Deputy Director of the E-House Research Institute in Shanghai. From the perspective of real estate companies, the past two years have seen significant discounts, so the space for price declines is decreasing. Meanwhile, in some key cities, the enthusiasm for new home projects is increasing, reflecting active market entry of quality properties and a rising cost-performance ratio for homebuyers.

The second-hand housing market is also sending positive signals.

In March, the second-hand housing prices in 70 cities decreased by 0.4% month-on-month, narrowing by 0.1 percentage points from the previous month, with the decline narrowing for two consecutive months.

The most notable stabilization was in first-tier cities, where sales prices decreased by only 0.1% month-on-month, narrowing by 0.4 percentage points from January. Beijing and Shanghai saw increases of 0.3% and 0.2%, respectively, while Guangzhou and Shenzhen declined by 0.5% and 0.4%.

Second- and third-tier cities experienced declines of 0.4% and 0.5% respectively, with both narrowing by 0.1 percentage points.

In February, only two cities—Beijing and Shanghai—saw increases in second-hand home prices month-on-month.

Yan Yuejin noted that in recent years, these two cities had a large number of second-hand homes listed, with significant price adjustments, with some properties losing 40% or more of their peak prices, making the market quite adjusted. Coupled with policies easing restrictions, lowering down payments to 15%, and increased demand for school district housing in the first half of the year, market activity has clearly improved, helping stabilize and improve prices. It is expected that more second-tier cities will join the trend of rising home prices.

Volume reduction and quality improvement, awaiting demand release

Overall, the supply-demand relationship in real estate has also shown some positive changes.

According to data from the National Bureau of Statistics, in January-February, the area of commercial housing for sale was 79.998 million square meters, up 0.1% year-on-year, with the growth rate slowing by 1.5 percentage points from the end of 2025. Among these, the area for sale for less than three years was 60.616 million square meters, down 1.6%.

The slowdown in the growth of for-sale area essentially reflects a reduction in inventory pressure, indicating that the market’s available housing supply is decreasing, and the supply-demand relationship is gradually balancing. Since the major shift in supply-demand dynamics in 2023, this is another key positive signal from the supply side. Coupled with the decline in second-hand home listings, it can be judged that the current market supply adjustment is relatively sufficient.

Development investment also showed signs of narrowing decline. In January-February, nationwide real estate development investment was 961.2 billion yuan, down 11.1% year-on-year, narrowing by 6.1 percentage points from the previous year.

Yan Yuejin emphasized that the focus for this year’s real estate development investment is “reducing volume while improving quality.” From the supply situation in key cities, the volume is not large, but the quality has significantly improved. This provides stronger support for further promoting high-quality and high-volume development investment this year.

According to Centaline Research Institute data, in January-February 2026, the transaction planning area of various land types in 300 cities was 2.37 billion square meters, down 23.7% year-on-year.

On March 16, a relevant official from the Ministry of Natural Resources stated at a press conference that “new construction land is generally not used for commercial real estate development. This does not mean no land is supplied for real estate; rather, it emphasizes efficient use of existing stock resources.”

In the first two months of this year, sales area of new commercial housing was 92.93 million square meters, down 13.5% year-on-year, with the decline expanding by 4.8 percentage points from last year; residential sales area fell by 15.9%. Sales revenue was 8.186 trillion yuan, down 20.2%, with the decline widening by 7.6 percentage points.

Li Yujia pointed out that the decline in the new housing market in January-February is related to the high base last year, the longer Spring Festival holiday, and a record high number of outbound travelers.

It is important to note that demand for new homes is mainly driven by improvement needs. When second-hand housing transactions become active and dominate the overall market, supported by policies and product innovation, the housing replacement chain of selling old and buying new, and swapping properties, is expected to activate, thereby boosting new housing. This is key to stabilizing the new housing market after both supply and demand hit lows.