Big news for anyone watching the housing market: Redfin believes the reset of the housing market will officially kick off in 2026. This isn't about a sudden crash, but rather a slow, steady comeback where things start to feel a little more balanced. We're talking about improved affordability for buyers, thanks to incomes growing faster than home prices for the first time in a long while. Think of it as a much-needed exhale after years of soaring prices and crushing interest rates.

From my own experience observing and working within the real estate world, this prediction feels both hopeful and realistic. We've seen firsthand how difficult it's been for many, especially younger generations, to get a foot in the door. While 2026 won't be a magic bullet, it's the year Redfin sees the tide starting to turn. Let's dive into what that “reset” really means.

Housing Market Predictions for 2026: Affordability, Prices, and Demand

What Exactly is the “Great Housing Reset”?

Redfin isn't forecasting a dramatic price drop or a full-blown recession. Instead, they're pointing to a multi-year period where we'll see:

• Gradual increases in home sales: More people will be able to buy homes.
• Normalization of prices: Prices will still rise, but at a much slower, more manageable pace.
• Improving affordability: This is the key! For the first time since the Great Recession era, wages are expected to outpace home price growth over a sustained period.

This doesn't mean instant affordability for everyone, especially Gen Z and young families who will still face challenges and likely need to make compromises, like getting roommates or delaying big life decisions. But it's a significant shift from where we are now.

Prediction 1: Mortgage Rates Will Be More Manageable

One of the biggest hurdles for buyers lately has been sky-high mortgage rates. Redfin predicts that by 2026, the 30-year fixed mortgage rate will average around 6.3%. This is down from an estimated 6.6% in 2025.

Why the dip? A slightly weaker job market is expected to prompt the Federal Reserve to cut interest rates. However, don't expect rates to plummet dramatically. Lingering inflation worries and the avoidance of a recession mean the Fed will likely be cautious, keeping rates from going much lower than what financial markets have already anticipated. While we might see rates dip below 6% occasionally, it won't be for a long stretch. Even a change in Fed leadership in 2026 probably won't shake things up drastically, as long-term rates like mortgages are largely influenced by the bond market.

Prediction 2: Affordability Gets a Boost as Wages Outpace Prices

This is where the “reset” really starts to feel tangible. Redfin forecasts a modest 1% year-over-year increase in median U.S. home prices for 2026. This slow growth is attributed to persistently high mortgage rates and prices, along with a still-cooling economy, which will hold back buyer demand.

But here's the game-changer: home prices will grow slower than wages for a significant period. This is something we haven't seen since the years following the 2008 financial crisis. Combine this with slightly lower mortgage rates, and our monthly housing payments will grow slower than our paychecks.

• Why aren't prices dropping? You might wonder why prices aren't falling if demand is low. The main reason is that sellers are holding back. Most homeowners have significant equity in their homes, meaning they've gained a lot of value. This equity protects them from the risk of owing more on their mortgage than their house is worth, and with low mortgage delinquency rates, they can afford to wait for the market to recover before selling. Unlike past downturns, today's homeowners generally have good credit, ample equity, and low existing mortgage rates, reducing the pressure to sell at a loss.

This improvement will entice some buyers back into the market, but for many, especially Gen Z and young families, owning a home will still feel like a stretch.

Prediction 3: Home Sales Will See a Modest Rise

Expect existing home sales to increase by about 3% in 2026, reaching an annualized rate of 4.2 million. This increase will likely pick up steam during the spring season, especially compared to spring 2025 when mortgage rates were higher.

The sales will rise, but not dramatically, because affordability will improve just enough to pull some hesitant buyers off the fence. However, many house hunters will remain priced out, either from the cost itself or a less robust job market. Redfin notes that AI's impact on some white-collar jobs could also contribute to employment uncertainty for some Americans.

Prediction 4: Rents Are Likely to Rise Too

While buyers might see some relief, renters could face different pressures. Redfin predicts that rents will likely increase by about 2% to 3% nationwide in 2026, tracking closer to the general pace of inflation.

This rise is driven by a combination of factors:

• Slower apartment construction: The boom in new apartment buildings has slowed down.
• Increased demand for rentals: With buying still expensive, more people are choosing to rent, making apartments more competitive.

However, in some areas, like parts of South Florida and Southern California, stricter immigration policies might temper the growth in rental demand.

Prediction 5: Household Structures Will Continue to Evolve

The affordability crunch is already reshaping how we live, and Redfin expects this to continue. The predicted improvement in 2026 won't be enough to instantly boost homeownership for younger generations. We'll likely see:

• More multi-generational living: Adult children moving back in with parents, or vice-versa, will become more common.
• Friends pooling resources: More groups of friends will likely team up to buy homes together.
• Smaller families: High housing costs could continue to contribute to declining fertility rates.

Interestingly, Redfin also points to a trend in home renovations. With more families needing to accommodate multiple generations, features like separate suites for extended family are predicted to become a popular design choice. Imagine a converted garage becoming a comfortable living space for an adult child or an aging parent.

Prediction 6: Policymakers Will Address the Affordability Crisis

The widespread issue of housing affordability is a major concern for voters, and Redfin believes policymakers on both sides of the aisle will feel the pressure to act. We can expect:

• More YIMBY (Yes In My Backyard) initiatives: Efforts to streamline or permit more housing development will likely gain traction.
• Zoning reform: Changes to make it easier to build accessory dwelling units (ADUs) and home additions could be more common.
• Focus on manufactured and modular housing: Some states might explore building more of these cost-effective housing options, particularly in rural areas.

While these policy changes could gradually chip away at the affordability problem, Redfin cautions that they won't be an instant fix. The true solution, they emphasize, lies in time and the gradual alignment of wages and home prices.

Prediction 7: More Refinancing and Remodeling

With a significant portion of homeowners still having mortgage rates above 6%, Redfin anticipates a more than 30% annual increase in mortgage refinances in 2026. Many homeowners who bought recently with higher rates will be looking to lower their monthly payments.

Additionally, homeowners who've benefited from years of strong home-value appreciation have built up substantial equity. This equity can be tapped into through home equity lines of credit (HELOCs) or cash-out refinances, providing funds for renovations. For many, remodeling their current home will be a more appealing and cost-effective option than selling and buying a new one.

Prediction 8: Shifting Hotspots – NYC Outskirts and Great Lakes vs. Zoom Towns

Where will people be looking to buy? Redfin predicts a shift:

• Areas Heating Up:
  • NYC Suburbs: Long Island, Hudson Valley, Northern New Jersey, and Fairfield County, CT, are expected to attract buyers who need to commute.
  • Great Lakes Region: Cities like Syracuse, NY, Cleveland, OH, St. Louis, MO, Minneapolis, MN, and Madison, WI, are attractive due to their affordability and relative safety from climate-related events.
  • Small and Mid-sized Cities: These areas are luring graduates with affordable rents and growing blue-collar job opportunities.
• Areas Cooling Down:
  • Coastal Florida and Texas: Markets here might see homes languish due to factors like rising insurance costs from natural disasters and remote workers returning to their home offices.
  • Popular “Zoom Towns”: Places like Nashville, TN, and Austin, TX, which boomed during the pandemic, might see their appeal wane as remote work lessens and affordability becomes a bigger concern.

Prediction 9: Climate Migration Becomes Hyperlocal

As climate-related events like wildfires and hurricanes become more frequent, Redfin predicts that climate concerns will increasingly influence moving decisions. However, this migration is expected to become more “hyperlocal.”

Instead of massive moves from, say, Florida to the Midwest, people living in vulnerable neighborhoods might move to less risky areas within the same metropolitan region. This allows them to stay close to their jobs and lifestyles while reducing their exposure to climate risks. The soaring cost of homeowners insurance in high-risk areas is a significant driver of this trend. This “local climate migration” could also, unfortunately, exacerbate inequality, leaving those who can't afford to move trapped in vulnerable areas.

Prediction 10: NAR and Local MLS Consolidation

The National Association of Realtors (NAR) is expected to shift its focus. Instead of dictating rules for hundreds of local Multiple Listing Services (MLSs), NAR will step back, allowing local branches more autonomy in setting listing rules for their specific markets. This move is likely to:

• Accelerate consolidation: Smaller MLSs will merge into larger, regional ones.
• Improve data and efficiency: Larger networks can offer clearer rules, faster innovation, and cleaner data for real estate professionals and consumers alike.

Prediction 11: AI as a Real Estate Matchmaker

Artificial intelligence, especially generative AI, is set to become a powerful tool in real estate. Imagine searching for a home not just by location and price, but by specific lifestyle needs. AI could:

• Personalize home searches: Help buyers find homes that precisely match their budget, desired features, and lifestyle.
• Identify niche markets: Assist buyers looking for homes with specific wellness amenities or unique architectural styles.
• Transform agent tools: Empower real estate agents with AI-driven insights to better connect with clients and recommend the perfect properties.

My Takeaway

As someone who lives and breathes real estate, Redfin's prediction of a “Great Housing Reset” starting in 2026 resonates. It acknowledges the current affordability crisis while offering a roadmap for a more balanced future. It’s not a quick fix, but a gradual return to normalcy where homeownership becomes attainable for more people. The emphasis on wages outpacing prices, combined with slightly more manageable mortgage rates, is the critical element. While challenges remain, especially for younger buyers and renters, 2026 marks the anticipated beginning of a healthier, more sustainable housing market.

It feels like we’ve been talking about the housing market and its ups and downs for years now. But what does the future hold? If you’re thinking about buying, selling, or just curious about where things are headed, you’re in the right place. I’ve been digging into the latest forecasts, and the buzz is that the housing market predictions for 2026 are looking a lot brighter, with experts pointing towards a potential comeback after a period of slower activity.

To cut straight to the chase, the National Association of REALTORS® (NAR) is forecasting a significant jump in home sales for 2026, potentially seeing a double-digit increase. This is welcome news for many who have felt the squeeze of higher prices and tougher buying conditions. While it’s not a crystal ball, understanding these predictions can help us make smarter decisions.

Housing Market Predicted to See Strong Growth in 2026: Expert Forecast

What’s Driving the Expected Comeback?

So, what’s behind this optimistic outlook for 2026? It boils down to a few key factors that are starting to come together. Think of it like ingredients for a good meal – each one is important, but together they create something substantial.

One of the biggest drivers is expected to be steady job growth. When people have stable jobs and feel confident about their future, they’re more likely to make big decisions like buying a home. We’ve seen job gains holding up pretty well, and this is a fundamental strength that supports the housing market.

Another crucial piece of the puzzle is mortgage rates. For a while now, higher mortgage rates have been a big hurdle for many potential buyers. They’ve made monthly payments significantly more expensive, pushing some people out of the market altogether. However, experts like Lawrence Yun, the chief economist at NAR, are forecasting a modest decline in mortgage rates for 2026. He expects the average 30-year fixed rate to hover around 6% in 2026, down from an estimated 6.7% this year.

“It’s not going to be a big decline, but it will be a modest decline that will improve affordability,” Yun explained at a recent NAR event. This might not sound like huge news, but even small drops in rates can make a big difference in what people can afford each month.

Furthermore, homebuilder activity is also contributing to the supply side. While we’ve heard a lot about housing shortages, builders are continuing to add new homes to the market. This increase in supply, even if it's slow, helps balance things out.

The Big Numbers: What Sales and Prices Might Look Like

This is where things get really interesting. The NAR forecast suggests that 2026 could be the year we see a noticeable uptick in home sales.

• Overall Home Sales: NAR is predicting a 14% nationwide increase in home sales for 2026. This is a pretty significant jump compared to what we've seen recently.
• New-Home Sales: For those interested in new construction, the prediction is a 5% rise in new-home sales.

Now, what about prices? A common worry is that a surge in sales could lead to another rapid increase in home prices. However, the outlook for 2026 is different. NAR expects home prices nationwide to climb by about 4%.

This suggests a more balanced market where sales increase, but prices grow at a more sustainable rate. This is a good sign because it means affordability might improve without causing another affordability crisis. It’s important to remember that these are national averages, and local markets will always have their own unique trends.

Understanding the Nuances: A Market of “Haves” and “Have-Nots”

While the overall picture for 2026 looks positive, it’s not a one-size-fits-all story. The housing market today is quite uneven, and this likely will continue to some extent. Jessica Lautz, NAR’s Deputy Chief Economist, highlighted the concept of a market with “haves” and “have-nots.”

The “Haves”:

• These are often individuals who already own homes and have built up significant equity over the years.
• They are frequently repeat buyers, especially baby boomers, who can leverage their existing home equity, sometimes buying with cash.
• The upper end of the market has been doing better, with strong inventory and robust financial markets supporting sales in the $750,000 to $1 million price range.

The “Have-Nots”:

• These are primarily first-time homebuyers who are facing significant challenges.
• The share of first-time buyers has dropped to an all-time low of 21%, far below their historical average of 40%.
• Their average age has also increased, with a median age of 40. This means people are waiting longer to buy.

Why are first-time buyers struggling so much? Lautz pointed to several reasons:

• High rent costs: Rent payments eat into savings that could otherwise go towards a down payment.
• Student loan debt: Many young adults are burdened by student loans, making it harder to qualify for mortgages or save extra money.
• Childcare costs: Raising a family adds significant financial pressure.

To help these aspiring homeowners, Lautz suggests focusing on better financial education about down payment assistance programs and special loan types like FHA loans.

When Homes Sit, Prices Get a Push

We’ve also seen a trend where homes that stay on the market longer than expected often need price adjustments. This isn't necessarily a sign of a collapsing market but rather sellers adapting to buyer demand and market conditions. Yun shared some data on how price reductions tend to increase with how long a home has been listed:

• 0–14 days on market: Typically a 4.9% price cut if needed.
• 15–30 days on market: Might see a 6.1% cut.
• 31–60 days on market: A larger adjustment, around 7.3%.
• 61–90 days on market: Sellers might consider a 9% reduction.
• 91–120 days on market: Further adjustments could be around 10.6%.
• Over 120 days on market: For homes that have been listed for a long time, a 13.8% reduction might be necessary to attract buyers.

These price dips are often temporary or localized when inventory quickly grows. Nationally, the 4% median home-price gain expected for 2026 still points to overall price appreciation.

Looking Ahead: Fundamentals Remain Strong

Despite some of the challenges we’ve discussed, the underlying fundamentals of the housing market remain quite strong, according to Yun.

• Low Mortgage Delinquencies: The number of homeowners falling behind on their mortgage payments or facing foreclosure is at historically low rates. This is a critical indicator of market health.
• Homeowner Equity: Homeowners have built up substantial equity in their homes, providing a financial cushion.
• Steady Job Growth: As mentioned before, consistent job creation is a robust sign for the economy and housing demand.

So, while 2025 might be remembered as a slower year, the pieces for a more active and vibrant housing market in 2026 appear to be falling into place.

My Take on the Forecast

As someone who follows the housing market closely, I find NAR's prediction for 2026 to be cautiously optimistic and realistic. The emphasis on job growth and improving mortgage rates as key drivers makes sense. The forecast for a 14% sales increase is exciting, and the projected 4% price appreciation suggests a market that is growing, but not overheating.

The distinction between the “haves” and “have-nots” is particularly insightful. It reminds us that market conditions can vary wildly depending on your financial situation and where you are in your homeownership journey. For first-time buyers, the path will likely still involve significant planning and resourcefulness, making programs that help with down payments and offer lower interest rates crucial.

For sellers, especially those who might have overshot their pricing or are in a less in-demand area, adapting to market realities with realistic pricing or potential reductions will be key to a successful sale.

Ultimately, the housing market predictions for 2026 from NAR offer a hopeful outlook. It suggests a market that is becoming more accessible as rates ease and demand remains, while also appreciating in value at a more sustainable pace. It’s a forecast that encourages continued interest and readiness for those looking to enter or move within the housing market.

The real estate world is always buzzing with questions about what's around the corner, and when it comes to housing market predictions for 2025, we've got some insightful answers. According to NAR's Chief Economist, Lawrence Yun, while things have felt a bit slow lately, we can expect a brighter picture for home sales next year, thanks to dipping mortgage rates and a healthier supply of homes.

It's a question on everyone's mind: what will 2025 hold for those looking to buy or sell a home? As someone who's spent years in this industry, watching trends and listening to the smartest minds, I'm always keen to see what the National Association of REALTORS® (NAR) has to say. Lawrence Yun's forecasts are always a big deal because he digs deep into the numbers and gives us a clear view of the road ahead.

NAR Chief's Bold Predictions for the 2025 Housing Market

The Current Scene: A Bit of a Stumble, But Not a Fall

Before we dive into 2025, let's quickly look at where we are now. As Yun points out, home sales have been “sluggish” for the past few years. This isn't a surprise to anyone who's been following the market. Two big culprits have been high mortgage rates – making monthly payments stretch much thinner – and a limited inventory of homes available for sale. It’s like trying to find a specific book in a library with very few shelves.

But here's the positive spin Yun offers, and it's a crucial one: mortgage rates are starting to come down, and more homes are appearing on the market. This combination is the recipe for a livelier housing market. Think of it as the library finally getting new shelves and a fresh shipment of books.

What Yun Sees for 2025: A Gentler Climb

So, what exactly does Lawrence Yun predict will happen in 2025? He's optimistic, but it's a grounded optimism.

• Boosting Sales: The biggest takeaway is that the declining mortgage rates and increasing inventory are expected to significantly boost home sales throughout 2025. This means more people will be able to afford their dream homes, and more sellers will find ready buyers.

• The Upper End Shines: Yun notes that record-high housing wealth and a booming stock market are giving current homeowners more power. This means those looking to trade up or buy more luxurious properties are in a good position. Their existing home equity and investments can help fund their next purchase. This segment of the market is likely to see a good amount of activity.

• The Challenge of Affordability: However, there's a flip side to this coin. Yun also highlights that sales of affordable homes are being held back by the lack of inventory. Even with lower interest rates, if there aren't enough starter homes or well-priced options, buyers in this bracket will continue to face difficulties. This is a persistent issue that the market needs to address.

Where Are the Deals? The Midwest Advantage

When I look at market data, I always try to understand the why behind the trends. Yun’s observation about the Midwest is particularly telling. He points out that the Midwest was the best-performing region recently, and the reason is straightforward: relatively affordable market conditions.

To break this down further, the median home price in the Midwest is a solid 22 percent below the national median price. This affordability is a magnet for buyers who might be priced out of other, more expensive regions. When you combine this inherent affordability with the general market improvements Yun predicts for 2025, the Midwest could see even more interest.

Digging Deeper: The Latest Data and What It Means

To get a real feel for where we're headed, it's essential to look at current data. The NAR's Existing-Home Sales Report for August (released September 25, 2025) gives us some crucial clues.

Let's look at the snapshots provided:

August 2025: A Closer Look

My Take: The month-over-month sales dip might seem concerning, but the year-over-year increase of 1.8% is a more significant indicator of underlying strength. More importantly, the inventory is up a substantial 11.7% compared to last year. This is great news for buyers, as more choices usually lead to less frantic bidding wars. The median price still climbing is a sign of continued demand, even with higher rates.

Single-Family Homes vs. Condos

• Single-Family Homes: Saw a 0.3% decrease in sales month-over-month but a 2.5% increase year-over-year. The median price is up 1.9% to $427,800. This tells me the demand for traditional homes remains strong, and prices are still creeping up.
• Condominiums and Co-ops: Sales were flat month-over-month, but down 5.1% year-over-year. The median price saw a modest 0.6% increase to $366,800. This might indicate that while condos are more affordable, the overall trend for them isn't as robust as single-family homes right now, potentially due to changing lifestyle preferences post-pandemic.

Regional Performance in August 2025

Here's how different parts of the country fared:

• Northeast: Sales down 4.0% month-over-month and 2.0% year-over-year. Prices are up 6.2% to $534,200. This region is still expensive, and sales seem to be cooling off a bit.
• Midwest: Sales up 2.1% month-over-month and 3.2% year-over-year. Prices are up 4.5% to $330,500. This confirms Yun's point – affordability is driving sales here.
• South: Sales down 1.1% month-over-month but up 3.4% year-over-year. Prices are up 0.4% to $364,100. A mixed bag, but the year-over-year growth is positive.
• West: Sales up 1.4% month-over-month but down 1.4% year-over-year. Prices are up 0.6% to $624,300. The West remains the priciest region, and while some sales are picking up, overall activity is a bit slower year-over-year recently.

My Thoughts on Regions: The data strongly supports Yun's emphasis on the Midwest's affordability. Buyers looking for value are increasingly looking there. The West's high prices continue to be a barrier, even with slight sales upticks.

Other Important Indicators

• Time on Market: Properties are taking a median of 31 days to sell, up from 28 days last month and 26 days last year. This is a clear sign that buyers have more negotiating power.
• First-Time Homebuyers: 28% of sales were to first-time buyers, unchanged from July and up from 26% last year. This indicates that despite challenges, the market is still accessible for those entering homeownership.
• Cash Sales & Investor Activity: 28% of transactions were cash sales, down from last month but up from last year. 21% were by individual investors, up slightly. This suggests that while individuals are still buying with cash, institutions might be pulling back slightly, and individual investors see opportunities.
• Distressed Sales: 2% of sales were distressed properties (foreclosures, short sales), which is a very low number. This indicates a healthy market with minimal distress.

Mortgage Rates: The Key Player

And then there are the mortgage rates. In August, the average 30-year fixed-rate mortgage was 6.59%, down from 6.72% in July and only slightly higher than 6.50% a year ago. This downward trend is critical for the 2025 predictions. As rates continue to ease, more buyers will qualify for loans, and their purchasing power will increase.

My Personal Take on the 2025 Outlook

From where I stand, Lawrence Yun's Housing Market Predictions 2025 paint a picture of a market that’s healing and finding its balance. The days of sky-high appreciation might be behind us for a bit, and that’s actually a good thing for long-term stability.

I believe we’ll see a more normalized market in 2025.

• Buyers: You’ll likely have more options and more time to make decisions. The pressure to offer above asking price on every single home will lessen, especially outside of the most competitive areas. Keep an eye on those declining mortgage rates – they are your biggest ally.
• Sellers: While bidding wars might not be as common as they were a couple of years ago, well-priced and well-maintained homes will still sell. Your strategy will need to focus on presenting your home in the best possible light and being realistic about pricing based on current market conditions.
• Affordability: This will continue to be a theme. Regions like the Midwest will likely see sustained interest. For those looking in hotter markets, creative financing or looking at the next tier of towns might be the way to go.
• The “Trade-Up” Market: Yun's point about those with existing home equity is important. This segment will likely drive a good portion of sales, as people are looking to upgrade their living situations now that their financial footing is stronger.

The housing market is a complex beast, influenced by many factors. But based on the data and the expertise of someone like Lawrence Yun, 2025 looks like a year where more people will be able to achieve their homeownership goals. It's not a boom-and-bust prediction, but one of measured growth and a more accessible market for many.