Housing Market Predictions for 2026 by America’s Leading Economists

The buzz around the 2026 housing market is that it's poised for a comeback. After a few years of bumps and bruises for buyers and sellers alike, America's top housing economists are seeing a shift. They predict a rebalance, with more homes available and mortgage rates potentially easing, making it a more favorable year for many to jump into homeownership or upgrade.

As someone who spends a lot of time thinking about houses and how people buy them, I’ve been watching these trends closely. This isn't just about numbers on a spreadsheet; it's about people achieving a major life goal. And from what I'm hearing from the experts, that dream is looking a lot more attainable in 2026.

Let's dive into what these leading voices are saying and what it means for you.

Housing Market Predictions for 2026: What America's Leading Economists Are Saying

A Renewed Energy for Home Sales in 2026

Lawrence Yun, NAR Chief Economist, paints a pretty optimistic picture for 2026. He believes we'll see a noticeable bump in home sales, estimating an increase of about 14% nationwide. His reasoning is solid: more homes are coming onto the market, and the “lock-in effect” (where people with low mortgage rates are hesitant to sell) is starting to fade. When life events happen – like needing more space for a growing family or moving closer to jobs – people are more likely to list their homes. Plus, he anticipates lower mortgage rates, which will open the door for more buyers to qualify for a loan.

• Home Prices: Gentle Gains Ahead. Don't expect a wild spike like we saw a few years ago. Yun predicts home price growth to be quite modest, around 2% to 3%. This is great news because it means your income will likely outpace both inflation and home price increases. Homeowners shouldn't worry about their equity taking a hit; prices are stable and expected to grow at a healthy, sustainable pace.
• Less Crowded Open Houses. Inventory is up by roughly 20% compared to last year. While we're not quite back to what I'd call “normal” pre-pandemic inventory levels, there are definitely more choices for buyers. This means less pressure to make snap decisions and a smaller chance of getting caught in bidding wars. It’s a welcome change from the frenzy of the past!
• The American Dream is Still Alive. The desire to own a home hasn't gone anywhere. For many renters, the only thing standing in their way has been the high cost of mortgages. With better conditions expected in 2026, that dream of owning your own piece of the American pie is looking more achievable.

Signs of Life from the Supply Side: New Home Construction

Robert Dietz, chief economist at the National Association of Home Builders, is also seeing positive movement, particularly in new-home construction. A big factor here is the Federal Reserve's actions. While they don't directly set mortgage rates, their decisions do influence the interest rates builders pay for construction loans. Lower rates for builders mean they can afford to build more, which ultimately helps increase the housing supply. Dietz anticipates about a 1% increase in single-family home building and new-home sales for 2026.

• An Unusual Price Dynamic. Interestingly, Dietz points out that the median price of a resale home is currently higher than the median price of a newly built home. This is a rare occurrence and has only happened a few times in recent decades. Builders are offering incentives like price cuts, and the locations of new construction are contributing to this interesting market quirk.
• The Persistent Housing Deficit. Even with more homes becoming available, there's still a structural problem: we simply don't have enough homes for the number of people. This “housing deficit” is a major reason why affordability remains a challenge. The only real long-term solution is to build more homes – single-family, multi-family, for sale, and for rent.
• Zoning Laws are a Hurdle. Dietz highlights that restrictive zoning and land-use policies often make it difficult to build the types of homes we need, like townhomes, which can be more affordable. Updating these policies to allow for denser, more efficient construction is crucial.
• Shifting Geography: Watch the Midwest. While some previously booming markets like Texas and Florida have cooled a bit, Dietz notes emerging pockets of strength, especially in the Midwest. Affordable cities near major universities, like Columbus, Ohio, Indianapolis, and Kansas City, are showing strong growth. This suggests a geographic shift in where the housing action will be.

Affordability Takes Center Stage

From my perspective, affordability is the linchpin. When people can afford to buy, the whole market benefits. Danielle Hale, chief economist at realtor.com®, is incredibly optimistic about improving affordability in 2026, something she believes will be a major drivers for home sales to finally break through the stagnant 4 million mark we've seen lately.

• Monthly Payments Easing. Hale's team estimates that 2026 will be the first time we see monthly mortgage payments decrease since 2020. Even with a modest 2% home price growth, lower mortgage rates will more than offset the increase. Combined with rising incomes, this means that in real terms, homes will become more affordable. It's not necessarily the sticker price dropping, but the cost relative to your income is improving.
• A More Balanced Market. We're seeing a slight increase in sellers taking their homes off the market, but this isn't a cause for panic. It mainly reflects a more balanced market where sellers aren't always getting every single thing they want, and some are choosing to wait to sell. The market is the most balanced it's been in nearly a decade, giving buyers a bit more breathing room and requiring sellers to be more flexible.
• Regional Differences Persist. While national affordability is improving, Hale points out significant regional variations. Markets in the South and West, where policies have encouraged more building, are more balanced. However, the Northeast and Midwest are still dealing with lower inventory and continued price increases compared to pre-pandemic levels.
• Policy Stability is Key. Hale expects the pace of policy changes to slow down in 2026. This stability will be a relief for everyone involved – buyers, sellers, and builders – allowing them to plan more effectively without constantly reacting to new rules.

Demographics: Who is Buying and What They Want

Understanding the people in the market is just as important as understanding the numbers. Jessica Lautz, NAR's deputy chief economist, is watching key demographic trends that are shaping who is buying and what kind of homes they're looking for.

• First-Time Buyers Gradually Returning. With interest rates coming down and more existing homes available, Lautz is hopeful that first-time buyers will seize the opportunity in 2026. They are crucial for a healthy, dynamic housing market, and homeownership is a powerful way to build wealth.
• Boomers Still Leading the Pack. Baby boomers continue to be a dominant force. They have significant housing wealth and the flexibility to move where they want, often to be closer to family. They aren't making many compromises on their home choices and have the financial means to do so. The continued presence of retirees in the market might mean a shift towards smaller households and different housing preferences, with fewer buyers having young children.
• All-Cash Buyers Aren't Disappearing. While mortgage applications are on the rise, indicating more buyers using financing, Lautz doesn't expect all-cash buyers to vanish. The wealth accumulated in the housing market ensures that there will always be individuals who can purchase homes outright.

The Big Picture: Mortgage Rates Remain the Wildcard

If there's one factor that everyone agrees will have the biggest impact, it's mortgage rates. Nadia Evangelou, a senior economist at NAR, emphasizes how critical rates are for affordability.

• Lower Rates Unlock Buyers. Evangelou highlights that a mere one percentage-point drop in mortgage rates can allow about 5.5 million more households nationwide to qualify for a mortgage. This includes around 1.6 million renters who could potentially become first-time homebuyers. While not all of these millions will buy, it could translate into an additional 500,000 home sales in 2026. This is why economists are so focused on rate movements.
• Inventory Needs to Keep Pace. However, Evangelou cautions that lower rates alone won't create a super-charged market. We still need more homes for sale to meet the demand that will come with lower rates. Inventory is rising, but it needs to continue growing to keep pace.
• Middle-Income Buyers Still Feeling the Squeeze. Despite these positive trends, Evangelou points out that middle-income buyers are still struggling. They can currently afford only about 21% of available homes, a far cry from the 50% they could afford before the pandemic. This underscores the need for targeted solutions like building more homes that align with middle-income budgets.

My Take: A Year of Opportunity

As I see it, 2026 is shaping up to be a year of significant opportunity in the housing market. The combined forces of increasing inventory, moderating price growth, and the potential for lower mortgage rates are creating a more balanced environment. This is fantastic news for those who have been priced out or hesitant to jump in.

I'm particularly encouraged by the prediction that home price growth will be in line with or just slightly above inflation. This means that homeownership should continue to be a sound investment, with the potential for wealth building without the fear of prices plummeting. The subtle shift in market balance, where sellers need to be more flexible, is also a welcome development for buyers who have felt overwhelmed by intense competition.

The demographic shifts, like the continued strength of first-time buyers and the evolving needs of an aging population, also suggest a market that is adapting and serving a broader range of people.

However, I believe it's essential to remember that the housing market is not a single entity. It's a collection of local markets, each with its own drivers and challenges. While the national outlook is positive, buyers and sellers should still do their homework on their specific local conditions.

Ultimately, the economists I've consulted are not predicting a boom and bust, but rather a steady, healthy recovery. For those looking to buy, sell, or invest, 2026 looks like a promising year to make your move.