As we approach the end of 2025, the real estate market in Central Kentucky continues to show resilience amid national economic shifts.
Fayette County, home to the bustling city of Lexington, and neighboring Scott County, anchored by Georgetown, represent key areas in the Bluegrass region. These counties have experienced steady home price appreciation over the past few years, driven by factors like population growth, job creation, and affordable living compared to national averages.
Looking ahead to 2026, forecasts indicate moderate growth in selling prices, with experts predicting a balanced market influenced by easing mortgage rates and increased inventory.
The Kentucky housing market as a whole is poised for continued stability, with home values expected to rise modestly. Nationally, projections from Zillow suggest a 1.2% increase in home prices between late 2025 and 2026, a revision upward from earlier pessimistic views. Central Kentucky, local dynamics, such as the expansion of industries like manufacturing and healthcare, could amplify this trend, making Fayette and Scott counties attractive for real estate activity.
Current Housing Market in Central Kentucky
As of October 2025, the Bluegrass region’s housing market is gaining momentum. In August 2025, Central and Southern Kentucky’s 38-county area reported increases in sales, pending sales, and new listings, with the latter hitting a six-year high. This surge in inventory is a welcome shift from the supply shortages that plagued the market post-pandemic, helping to temper price escalations.
In Fayette County, the median listing home price stood at $375,000 in August 2025, marking a 4.2% year-over-year increase. The average home value, according to Zillow, is approximately $321,000, up 3.2% from the previous year. Homes in Lexington are moving quickly, often going pending in about 10 days, reflecting strong demand from young professionals and families drawn to the area’s universities and cultural scene.
Scott County mirrors this trend but with slightly more modest figures. The median listing price reached $399,900 in September 2025, up 2.6% year-over-year. Georgetown, a key suburb, the average home value hovers around $325,000, with a 3.1% annual rise. The county benefits from its proximity to Toyota’s manufacturing plant, which supports employment and attracts buyers seeking suburban affordability.
Overall, Kentucky’s median home price is around $265,000, well below the national average, positioning the state as an affordable haven amid broader market cooling. However, challenges like high interest rates and inflation in construction costs persist, influencing the trajectory into 2026.
Factors Influencing 2026 Forecasts
Several key elements will shape home price forecasts for 2026 in Fayette and Scott counties. First, mortgage rates are expected to continue easing, potentially dipping below 6% by mid-2026, which could boost buyer activity and sales volume.
This decline is anticipated to encourage more homeowners to list properties, further increasing inventory and preventing sharp price spikes.
Economic growth in Central Kentucky plays a pivotal role. Job creation in sectors like automotive (in Scott County) and education/healthcare (in Fayette) is projected to drive population influx, sustaining demand.
A HUD report highlights demand for around 550 new homes under construction in the Lexington-Fayette area, addressing part of the forecast period’s needs. Supply-demand imbalances remain a concern, with Kentucky facing urgent shortages that could push prices up if not met.
Inflation in materials and labor, coupled with high interest rates limiting new developments, may constrain supply growth. Nationally, experts foresee home sales jumping nearly 10% by the end of 2026, with moderate price growth around 3.3% annually through 2029.
Fayette County Forecast for 2026
In Fayette County, home selling prices are forecasted to rise moderately in 2026, aligning with national trends but bolstered by local strengths. Zillow’s revised outlook predicts a 1.2% to 2.5% increase in home values, potentially pushing the median selling price from $345,000-$375,000 in late 2025 to $354,000-$385,000 by year-end 2026. This equates to an average home value climbing to $329,000-$332,000.
The apartment and single-family markets are slightly tight, with new constructions expected to meet initial demand.
Lexington’s market is projected to see steady growth, with more homes entering the market in early 2026, leading to balanced conditions. But, if inventory grows too rapidly, price appreciation could slow to 2-3%, avoiding the rapid hikes of previous years.
Scott County Forecast for 2026
Scott County’s outlook is similarly positive, with forecasts indicating a 2% to 3.5% rise in home prices. The median selling price could reach $408,000-$414,000 by the end of 2026, up from $399,900 currently. In Georgetown, average values might increase to $331,000-$336,000.
The county’s appeal for rentals and resales in suburban settings supports this growth, with WalletInvestor providing long-term predictions emphasizing investment potential through 2030. Increased sales activity, projected at a national 9.6% rise, could translate locally, especially with industrial expansions drawing residents.
Comparison and Regional Outlook
Comparing the two counties, Fayette offers urban vibrancy with slightly higher growth potential (2.5-3.5%), while Scott provides suburban value with steady 2-3.5% gains. Both benefit from Kentucky’s affordability, but Fayette’s faster pace stems from Lexington’s economic hub status.
Regionally, the Bluegrass area is expected to outperform lagging metros, with no crash in sight due to sustained demand and limited supply.
For Your Consideration
The 2026 forecasts for Fayette and Scott counties point to moderate, sustainable home price growth, making Central Kentucky a promising market. Buyers should act amid easing rates, while sellers can capitalize on rising values. As economic factors evolve, monitoring inventory and rates will be key. With projections grounded in expert analyses, these counties remain beacons of opportunity in the evolving U.S. housing landscape.
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