A Market Ready to Shift Gears

After a couple of years where the housing market seemed to stall, momentum may finally be returning. For much of 2024 and 2025, high mortgage rates, rising home prices, and persistent affordability challenges left both buyers and sellers sitting on the sidelines. Many people wanted to move — but couldn’t quite make the math work.

That might all start to change in 2026.

According to housing economists and early forecasts, next year could mark the beginning of a more active, balanced, and opportunity-filled real estate cycle. The factors holding people back — namely, mortgage rates and home price growth — are showing signs of easing. That shift could create more confidence and movement among homeowners, buyers, and sellers alike.

Why 2026 Could Be the Turning Point

The U.S. housing market operates like a finely tuned engine, and for the past few years, that engine has been idling. Homeowners locked into ultra-low mortgage rates from 2020 and 2021 chose to stay put. Buyers, facing higher borrowing costs, had fewer affordable options. Inventory shrank, affordability dropped, and the number of home sales hit multi-year lows.

But every cycle has a turning point — and 2026 is shaping up to be that year.

Experts project that home sales will rise as conditions gradually improve. People who delayed their moves are reaching the point where life changes — a growing family, a job relocation, downsizing, or retirement — can no longer wait. The key ingredients to unlock that next wave of movement? A gradual decline in mortgage rates and a more sustainable pace of home price growth.

More Homes Are Expected To Sell

Let’s start with what may be the most encouraging sign: home sales are expected to increase.

Over the last two years, millions of potential movers pressed pause on their plans. Some stayed in place because they didn’t want to trade their 3% mortgage for a 7% one. Others simply couldn’t find a home that fit their needs and budget. But that collective pause is reaching its natural limit.

Housing demand never disappears — it only gets delayed.

As Danielle Hale, Chief Economist at Realtor.com, recently explained, “There is a lot of pent-up demand from buyers who wanted to move but couldn’t. As affordability improves, we expect those buyers to re-enter the market.”

Life transitions drive housing demand regardless of interest rates. People get married, divorced, have children, change jobs, or retire. Over time, those personal milestones translate into real estate transactions. That is why, even in slow markets, there is always an underlying current of movement waiting to surface.

Experts expect to see that current grow stronger in 2026.

Mortgage Rates Could Continue To Ease

Perhaps no single factor has influenced buyer confidence more than mortgage rates.

After climbing above 7% in 2023 and holding near that level for much of 2024, rates finally began to retreat. As of late 2025, the average 30-year fixed mortgage sits closer to the mid-6% range — a meaningful improvement that’s already sparking renewed activity.

The encouraging news is that economists forecast this trend to continue into 2026, though progress will be gradual.

There’s an old saying in housing economics: when rates rise, they take the elevator, but when they fall, they take the stairs. In other words, rate increases can happen quickly, but decreases are often slow and steady. That’s exactly what we’re seeing play out.

Analysts at Fannie Mae, Freddie Mac, and the Mortgage Bankers Association project that mortgage rates could stabilize in the low 6% range next year, with a possible dip into the high 5% range depending on inflation and Federal Reserve policy.

That may not sound like a dramatic drop, but even small changes in rates have a major impact on affordability. A half-point difference can save hundreds of dollars per month on a typical mortgage payment — a meaningful shift for many buyers who were priced out at 7%.

And as those savings add up, confidence returns. When buyers feel they can manage a mortgage comfortably, they act. And that activity, in turn, fuels broader market momentum.

Why Mortgage Rate Volatility Is Normal

It’s worth remembering that mortgage rates don’t move in a straight line. They respond to inflation reports, job data, and Federal Reserve policy announcements. So while the overall trend in 2026 is expected to be downward, there will be bumps along the way.

Buyers who wait for the “perfect” rate often find themselves chasing the market instead. The most successful buyers are those who stay flexible — locking in a favorable rate when it appears and knowing they can refinance later if rates continue to fall.

As Greg McBride, Chief Financial Analyst at Bankrate, puts it, “You don’t need to time the market perfectly to win. You just need to make a smart decision based on your current financial comfort and goals.”

Home Price Growth Will Be More Predictable

The other key ingredient in the 2026 outlook is home price moderation.

After years of double-digit appreciation in many areas, home values are finally leveling off. Nationally, prices are still expected to rise next year, but at a much slower and more manageable pace.

Economists across major housing research firms forecast home price growth in the 2% to 4% range for 2026 — roughly in line with historical norms. That’s a far cry from the rapid 15% or 20% gains seen during the pandemic years.

This slower growth is significant for two reasons:

1. It supports affordability. When price growth aligns more closely with income growth, more buyers can participate in the market.

2. It stabilizes expectations. Predictable price trends help both buyers and sellers plan with confidence, making negotiations smoother and less emotional.

As one housing report from CoreLogic recently noted, “While home prices continue to rise, the pace of growth has cooled to sustainable levels. This is a sign of a market that is returning to balance rather than overheating.”

Why Prices Aren’t Expected to Fall

With all the talk about affordability, some may wonder whether home prices could actually decline. The answer, according to most experts, is no — at least not on a national scale.

While isolated markets may experience modest pullbacks, there are strong structural factors supporting prices overall.

For one, the United States still faces a housing shortage. The National Association of Realtors estimates the country is short between 4 and 5 million housing units. That means demand continues to outpace supply, even as new construction ramps up.

Additionally, most homeowners today have significant equity. Homeowners with ultra-low mortgage rates have little incentive to sell at a discount. This equity cushion reduces the risk of widespread price drops like those seen during the 2008 housing crisis.

The result is a market that remains resilient. Prices may not soar like before, but they’re also unlikely to collapse. For buyers, that means the risk of “buying at the top” is far lower than it was a few years ago. For sellers, it means continued stability and steady demand.

Regional Differences Will Still Matter

While national trends tell one story, local markets often tell another.

In areas where job growth, population inflow, and housing construction are strong, prices could still climb faster than the national average. Meanwhile, in markets where supply has caught up or affordability is stretched thin, price growth may flatten or even dip slightly.

That’s why working with a local real estate professional remains essential. Local data on inventory levels, new construction activity, and buyer demand can reveal whether your area is poised for stronger appreciation or more negotiating room.

A skilled agent can help you interpret these local nuances — and make the most strategic move possible.

2026: A Year of Renewed Opportunity

If 2024 and 2025 were years of hesitation, 2026 is shaping up to be a year of reengagement. Buyers are expected to return as affordability improves, and sellers are likely to follow as more confidence enters the market.

Real estate economists at Fannie Mae forecast that existing home sales could rise by more than 10% in 2026 compared to 2025. That’s a meaningful recovery after two years of suppressed activity.

In short, the gears of the housing market are beginning to turn again — slowly at first, but steadily.

For those who have been waiting for a sign, this might be it.

What This Means for You

If you’ve been holding off on making a move, the coming year could offer a window of opportunity. Lower mortgage rates, steadier home prices, and increased market activity can create a more balanced environment for both buying and selling.

Here are a few ways to prepare:

• Get financially ready. Review your credit score, debt-to-income ratio, and savings to make sure you’re in a strong position to qualify for a loan.

• Talk to a lender early. Pre-approval will give you clarity on your budget and allow you to act quickly when you find the right property.

• Stay informed about your local market. Real estate is hyper-local, and understanding what’s happening in your specific area can help you make the smartest decision possible.

Remember, you don’t have to time the market perfectly — you just need to align your goals with the right moment.

Bottom Line

After two years of a quieter housing market, 2026 is expected to bring more movement, more opportunity, and renewed confidence. With mortgage rates trending lower, home prices stabilizing, and buyer demand picking back up, the real estate landscape is setting up for a healthier and more balanced year ahead.

So the question is: will you be one of the movers making 2026 your year?

If you’re ready to start planning your next move, connect with a trusted real estate agent today. They can help you understand how the latest trends affect your local market — and guide you toward the best opportunities in the months ahead.