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Housing Market Forecast: Will 2026 Be a Good Year? An Expert’s Analysis

The real estate housing market has turned a corner post-pandemic.

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Jul 9, 2025

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The real estate housing market has turned a corner post-pandemic. Rates have experienced soft drops, the stock has gradually risen, and purchase demand has gradually gained momentum. However, there are still roadblocks, particularly in affordability and neighborhood gaps in supply.

Entering 2026, there are things you need to know about the housing market in advance — whether as a buyer, seller, investor, or agent — to remain one step ahead of the shifting real estate market. To help you out, I’ve combed through current data to form this housing market forecast for 2026.

Key housing market predictions
Regional & metro area forecasts
Buyer & seller outlook in 2026
Investment and rental market trends
Frequently asked questions (FAQs)
Bringing it all together

Key housing market predictions

It takes more than keeping a tab on mortgage rates to uncover where the housing market will stand in the coming year. A mix of economic factors, such as trends in inflation, housing starts, buyers’ demographics, and geographic migration, are all contributing to determining what comes next.

Nothing is guaranteed, but below are the most significant housing market forecasts based on the latest reports and industry trends.

1. Median home predictions

House prices in 2026 will still rise, but at a more modest and sustainable level than the pandemic double-digit growth. Median house prices will rise approximately 4% in 2026, as projected by the National Association of Realtors (NAR), after an estimated 3% in 2025. This is led by better inventory, stable mortgage rates, and tempered demand from interest-sensitive buyers.

While price growth is slowing, it is still positive due to continuing housing scarcity in most markets. Buyers can expect modest growth, and sellers can price properties correctly based on comps.

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2. Mortgage rate trends

Mortgage rates won’t return to pre-2022 rates — but most forecasts envision a modest decline occurring through 2026. Fannie Mae forecasts the 30-year fixed mortgage rate to settle at approximately 6.2% at the end of 2026, modestly below recent mid-6% highs. The same has similarly been projected by the Mortgage Bankers Association and NAR. The modest decline is based on expectations of ongoing moderation in inflation and the viability of interest-rate cuts by the Federal Reserve.

3. Inventory level estimate

Predictions on the housing market inventory indicate a modest rise in 2026 — but demand will continue to outpace the supply. According to ResiClub’s data, as of mid-2025, active inventory still lags by about 15% behind pre-pandemic levels, although most metros are well ahead.

Nationally, however, new listings are rising at a slow pace since homeowners are stuck in low-rate mortgages. Although the supply picture is heading in the right direction, full inventory recovery by 2026 will not happen, especially in metros with restrictive zoning or high construction costs.

4. Buyer/seller demand shift

As rates stabilize and more inventory comes on the market, buying and selling activity will both pick up modestly in 2026. NAR’s chief economist anticipates an 11% rise in sales of new homes in 2025 and an 8% increase in sales of new homes for 2026. This is a result of buyers’ pent-up demand that was delayed in 2023-2024 due to affordability.

On the sales side, 2026 housing market predictions include improved equity positions and fewer interest-rate fluctuations will motivate more owners to sell. However, buyer demand may still be biased toward affordability markets, with less activity in higher-priced markets unless rates keep falling.

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5. Construction & new builds forecast

Fannie Mae’s data shows that new single-family housing construction will rebound in 2026, but labor shortages, land values, and cost pressures will likely temper the rebound. After two years of drops in housing starts in 2024 and 2025, Census Bureau statistics indicate a modest turnaround in the second half of next year in areas with low-permitting jurisdictions.

Builders will continue with build-to-rent and energy-efficient designs to accommodate shifting demand among buyers. Multi-generational and smaller houses also are growing in popularity. As interest rates are likely to temper, homebuilder confidence will accelerate and lead to a modest rise in new inventory in the second half of 2026.

Regional & metro area forecasts

The housing market will continue to differ by region, with affordability, job growth, climate, and tax policy all influencing demand in 2026.

Sun Belt metros like Austin, Phoenix, and Tampa, which were once synonymous with runaway price appreciation, have seen quicker inventory recovery than national averages. This has led to more balanced markets. Denver and Dallas, for instance, have returned to or exceeded pre-pandemic inventory levels, ResiClub reports.

Meanwhile, most Midwest and Northeast markets remain undersupplied, exerting sustained pressure on prices. Secondary and tertiary cities with strong local economies and lower price points like Columbus, Raleigh, and Kansas City are attracting remote workers and investors. Agents would do well to pay close attention to regional migration trends and zoning changes, which could unleash possibilities in once-underloved neighborhoods.

For agents interested in locating and recruiting buyers moving into emerging areas, Zillow housing data can provide insight into where the demand is going. They’re especially valuable in projecting the growth of secondary markets so you can start listing and marketing efforts even farther in advance.

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Buyer & seller outlook in 2026

Housing market predictions in 2026 showcase less frenetic competition, more listings to select from, and negotiating clout with which to negotiate better terms in markets recovering from inventory shortfalls. While that may be the case, Fannie Mae states that affordability will continue to be out of reach for most, as home prices resume their modest appreciation and mortgage rates linger well above 6%.

For sellers, the outlook is improving but mixed by market. Sellers in low-supply markets can still command strong prices, but those in balanced or buyer’s markets must focus on staging, setting strategic list prices, and offering concessions such as rate buydowns. As more sellers return to the market motivated by life events or rising equity, real estate professionals should expect the conditions to gradually tilt in favor of prepared buyers and realistic sellers.

Investment and rental market trends

Investors in 2026 will have to contend with a market that gives mixed signals. On the one hand, demand for rental housing remains strong but more specifically in fast-growing, affordability-oriented metros. The build-to-rent sector continues to expand with institutional capital and private investors showing interest in this category.

On the flip side, the headwinds in the form of rising insurance premiums, rising property taxes, and tighter lending policies will compress margins. NAR’s data points to the softening of multifamily development in some metros, though it continues at a fairly healthy pace of approximately 8% in most metros. Rent-to-own and co-living are innovative models that can gain traction in more upscale markets. Markets with in-migration, employment growth, and landlord-friendly policies will offer the best chance for long-term investors.

Frequently asked questions (FAQs)

Data gathered by experts from Fannie Mae and NAR predict that rates will stabilize at the low 6% level, with the potential to dip to the 5.8% level later in the year. Rates at less than 5% are not going to happen unless the economy is in a deep recession.

Yes — for the majority of buyers, 2026 is better than 2023-2024. Increased inventory and rate stability provide buyers with more control and options, even if affordability may still be an issue in very popular neighborhoods.

A widespread crash is improbable. Appreciation in residential property values will come to a slower halt, but persistent shortages in the overwhelming majority of markets will support values. Corrections in prices can occur in specific overheated pandemic markets.

Bringing it all together

The housing market for 2026 is poised to be more stable than in prior years, but with a catch. Buyers will experience fewer bidding wars and more negotiating space in certain markets, while sellers in low-inventory markets may gain from being able to command good pricing.

This is where investors will have to balance higher insurance premiums and regional policy changes with strong rental demand and improving build-to-rent opportunities. By keeping your approach in sync with the latest housing market predictions in 2026, you’ll be poised to thrive in whatever the year brings.

Aloun Khountham

Aloun Khountham is a freelance real estate contributor to The Close and Fit Small Business. She brings a spark of innovation and a wealth of experience from the heart of New York City's real estate scene. With over five years as an operations executive at a growing brokerage, Aloun has been at the forefront of revolutionizing real estate operations. Her efforts were pivotal in integrating state-of-the-art technology and refining operational procedures. Beyond her executive role, Aloun was licensed as a real estate agent. She used her knowledge to empower her team from lead generation to deal closures, showcasing her comprehensive understanding of the industry's challenges and opportunities.