The housing market in 2026 is shaping up to be a period of welcome, albeit measured, improvement for most people involved. While mortgage rates are likely to stay a bit higher than we've become accustomed to historically, better income growth and a gradual increase in available homes mean things will become more affordable for buyers and offer more options for renters.

Housing Market Predictions 2026 for Buyers, Sellers, and Renters

As we look ahead to 2026, the whispers about the housing market are growing louder, and the picture is becoming clearer. After a few years that felt like a rollercoaster – exciting for some, terrifying for others – I'm sensing a shift. It’s not going to be a sudden drop in prices or a return to the ridiculously low mortgage rates of the past, but it will be a move towards more balance. Think of it as the market catching its breath.

According to the economic research team at Realtor.com®, we're likely to see mortgage rates averaging around 6.3% in 2026. That's a slight dip from the expected 6.6% for 2025, but still higher than the 4% we saw between 2013 and 2019. But here's the key bit: home prices are still predicted to grow, by about 2.2% nationally by the end of next year. This might sound alarming, but the good news is that incomes and inflation are expected to climb faster than home prices. This widening gap is what will bring a much-needed boost to affordability.

As Realtor.com Chief Economist Danielle Hale put it, 2026 “should offer a welcome, if modest, step toward a healthier housing market.” I personally feel this is spot on. It’s a gradual return to a more sensible market, not a boom or bust.

Let’s break down what this means for you, whether you’re dreaming of owning a home, looking to sell, or currently renting.

For the Homebuyers of 2026: A Bit More Breathing Room

I know many of you have been feeling the pinch. High prices, low inventory, and soaring mortgage rates have made buying a home feel like an impossible task lately. The good news for 2026 is that it's going to get easier.

This video explainer breaks down housing market predictions for 2026—for buyers, sellers, and renters.

You’ll benefit from a few key things:

• Slightly Lower (but still elevated) Mortgage Rates: That predicted 6.3% average for mortgage rates is a real sigh of relief compared to recent spikes. While not historically low, it makes a difference in your monthly payments and overall borrowing costs.
• Improving Affordability: This is the big one. The typical monthly payment for a home is projected to fall by about 1.3% compared to this year. For the first time since 2022, the monthly payment for the average home is expected to be less than 30% of a household's income. This is the magic number for affordability, and hitting it means more people will be able to qualify for mortgages and afford their payments without stretching too thin. I've seen firsthand as a professional how breaking that 30% mark can really impact a buyer's life.
• More Homes on the Market: Inventory is set to grow by a healthy 8.9% in 2026. This means more choices for you! You won't have to rush into a decision or settle for the first thing you see. The market is moving closer to pre-pandemic levels of supply, which is fantastic. By the end of 2026, inventory levels should be only about 12% below pre-2020 averages.
• New Construction Helping Out: Expect about 1 million new single-family homes to be built. This adds even more options to the market, especially for those looking for brand-new spaces.

Table: Key Factors for Homebuyers in 2026

While the unemployment rate is expected to tick up slightly, staying below 5% is a good sign for the overall economy and supports buyer confidence. However, I do agree with the Realtor.com® report – those with lower incomes or who are younger might still find parts of the market challenging as the labor market cools.

Ultimately, for buyers, 2026 looks like a year where you can breathe a little easier. The market will still require smart decisions and realistic expectations, but the overwhelming pressure should start to ease.

For the Home Sellers of 2026: Patience and Pragmatism are Key

If you're thinking about selling your home in 2026, it's crucial to understand that the market is shifting away from the red-hot seller's market we saw a few years ago. This isn't a bad thing, but it does mean adjusting your strategy.

From my perspective, sellers will need to be more strategic and go into the process with realistic expectations. Here’s what you should keep in mind:

• Competition is Growing: With more inventory available, buyers will have more options. This means your home will be competing with others on the market.
• Pricing is Crucial: Setting the right price from day one will be more important than ever. Overpricing your home will likely lead to it sitting on the market longer, requiring price reductions later. I've seen too many sellers lose out by being too stubborn on price initially. You'll need to pay close attention to comparable sales in your area.
• Flexibility is Your Friend: Be open to negotiation. Buyers might come in with offers that aren't exactly what you dreamed of, but a “good enough” offer that closes the deal might be your best bet. Consider offering seller concessions if needed to help a buyer with their closing costs or to buy down their interest rate.
• Market Variations Matter: The Realtor.com® forecast notes that markets in the Northeast and Midwest have been stronger recently, and this trend is expected to continue in 2026. Conversely, some markets in the South and West might see price declines. It’s essential to understand the local market dynamics where your home is located.
• Price Point Influences: Homes at lower price points have seen more price cuts lately, while homes above $1 million are still seeing solid activity from wealthy buyers. This suggests that if you have a high-end property, you might face less immediate pressure than if you have a starter home.

Chart: Seller Considerations for 2026

In short, sellers in 2026 should prepare for a more balanced market. It’s still possible to sell and make a profit, but the easy days of multiple offers above asking price might be less common. Your success will hinge on smart pricing, good marketing, and a willingness to be flexible.

For the Renters of 2026: A Glimmer of Relief

Renters have faced their own set of challenges with rapidly increasing rents in recent years. The good news for 2026 is that the tide is beginning to turn in your favor.

I've been watching the rental market closely, and the prediction of rents declining slightly is a welcome development. According to Realtor.com®, we can expect rents to fall by about 1% nationally in 2026. This follows an estimated 1.6% decline in 2025.

Why the change? Simply put, supply is catching up to demand. More new apartment buildings are coming online, which increases the number of places available to rent. This increase in supply is what typically pushes rents down or at least stabilizes them.

Here’s what this means for renters:

• More Affordable Rents: That extra breathing room in your budget can make a significant difference, especially after years of rising costs.
• Increased Mobility: With more units available and possibly lower prices, you might find it easier to move to a different neighborhood or a larger apartment if you need to. It also gives you more leverage when negotiating with your current landlord about renewing your lease.
• Renting Remains a Viable Option: For many, especially younger adults or those new to homeownership, renting will continue to be a more cost-effective option than buying in the short term. This trend allows more time to save for a down payment while enjoying relatively stable housing costs.

Key Takeaways for Renters in 2026

• Rent Declines: Expect a further 1% drop in asking rents nationally.
• Increased Supply: More new apartment construction is entering the market.
• Renter Mobility: More options and better affordability make moving or finding a new lease easier.
• Cost-Effective Choice: Renting likely remains more affordable than buying for many.

While these rent declines aren't a dramatic crash, they represent a meaningful shift back towards balance in the rental market. It’s a chance for renters to regain some financial footing and have more choices when it comes to where and how they live.

Looking Ahead: A Balanced Market Awaits

My overall take on the 2026 housing market forecast is one of cautious optimism. Realtor.com®'s predictions paint a picture of a market that is slowly but surely moving towards a healthier equilibrium. For buyers, it means more opportunity. For sellers, it means adapting to a more competitive environment. And for renters, it signifies a much-needed breather.

The journey back to pre-pandemic housing market norms is still a gradual one, but 2026 is shaping up to be a solid step in the right direction. The key themes are improving affordability, increasing inventory, and a more balanced power dynamic between buyers and sellers. It won't be perfect, and there will still be regional differences and individual challenges, but for many, 2026 promises a more accessible and stable housing market.

Are you watching the real estate market and feeling a bit confused? You're not alone. While the idea of home prices consistently going up might be what many of us are used to, the truth is, home prices are dropping in more than half of the major cities across the country right now. This isn't just a small blip; it's a noticeable shift with several important factors at play.

From my own experience watching this market, it's clear that the days of double-digit price increases year after year are taking a pause. The market is currently undergoing a rebalancing act, and understanding why this is happening is crucial for anyone thinking about buying or selling a home.

Why Are Home Prices Dropping in Over Half of Major US Cities in 2025?

The Big Picture: A Slowdown Across the Board

Let's look at the numbers. While national home values are still showing a slight increase year-over-year – around 1.3% according to the S&P CoreLogic Case-Shiller Index in September – this is the slowest annual gain since mid-2023. What's more, this national average is being pulled up by a few strong markets. Dig a little deeper, and you'll find that in 11 out of the 20 major metropolitan areas tracked by this index, home values have actually fallen on an annual basis.

You might be wondering which cities are seeing these declines. The data points to areas in the South and West, with places like Tampa, Florida, experiencing the biggest year-over-year drops. Even with these drops, it's important to remember that homes in these very same cities are still significantly more valuable than they were just a few years ago. For instance, Tampa homes are still about 55% higher than they were five years back.

On the flip side, some cities are still seeing growth. Chicago, for example, reported the biggest annual gain. This shows how uneven the market is right now; it's not a one-size-fits-all situation.

What's Driving These Price Drops? Let's Break It Down.

So, what’s causing this shift? It’s a combination of factors, but the two biggest players are high mortgage rates and tough affordability challenges.

• Mortgage Rates That Just Won't Quit: Remember when mortgage rates were in the 2-3% range? Those days feel like a distant memory. While rates have dipped slightly from their highest points (below 6.3% from Freddie Mac recently), they've remained stubbornly high for most of the past year, averaging around 6.35% in September. For potential buyers, this means their monthly payments are much higher, even if the sticker price of the house hasn't changed. This directly impacts how much house they can afford.
• Affordability is a Major Hurdle: When you combine high home prices that were driven up by years of low interest rates with current higher mortgage rates, you get a perfect storm for affordability issues. As Nick Godec, who tracks these markets, put it, the market is settling into an “equilibrium of minimal price growth—or, in some regions, outright decline.” It’s simply too expensive for many people to buy a home right now.
• Demand Takes a Hit: When buying a home becomes a stretch financially, demand naturally cools off. Buyers are either forced to wait, hoping rates or prices will drop further, or they are looking for smaller homes, less desirable locations, or just giving up on homeownership for now. Anthony Smith from Realtor.com® notes that while there's been some buyer activity, “sticky home prices and high borrowing costs continue to strain affordability, keeping home sales at historically low levels.”
• Inflation Plays a Role Too: When you look at home price growth compared to inflation, you see another layer to the story. For the past four months, national home prices have grown slower than the overall inflation rate (Consumer Price Index). This means that, in real, inflation-adjusted terms, home prices are actually slightly decreasing. This gives a small glimmer of hope for affordability, but it doesn't erase the fact that prices are still high.

A Look at the Numbers: September Data Snapshot

To really see what's going on, let's consider some key figures from September:

Source: S&P CoreLogic Case-Shiller Index (September data)

It's interesting to see how some previously hot markets are now cooling down. This is a strong indicator that the national trends are real and affecting diverse locations.

My Take: It's About Finding a New Normal

From what I've seen, this isn't necessarily a crash in the making. Instead, it feels more like the market is correcting itself after a period of incredibly rapid growth fueled by historically low interest rates. Many of us in the real estate world felt that the pace of appreciation was unsustainable.

The current situation is forcing buyers and sellers to be more realistic. Buyers are being more selective, and sellers who are eager to sell might need to adjust their expectations on price. It’s a return to a more balanced market where demand and supply, along with economic conditions, are the primary drivers, rather than just the fear of missing out.

What Does This Mean for You?

If you're thinking about buying:

• You might have more negotiating power. With prices softening in some areas and fewer bidding wars, you might be able to get a better deal.
• Affordability is still key. Make sure you're comfortable with your monthly payments, even with slightly lower prices or rates.
• Do your homework. Research your local market because trends can vary greatly from city to city.

If you're thinking about selling:

• Price your home realistically. Overpricing will likely lead to your home sitting on the market longer.
• Consider making improvements. A well-maintained and appealing home will stand out.
• Be patient. Selling might take a bit longer than it did a year or two ago.

The housing market is constantly evolving. While home prices are dropping in many major cities, it's a complex picture. Understanding the forces at play – high mortgage rates, affordability crunch, and a return to more realistic valuations – will help you navigate these changes with confidence.