Bold warning: the housing market in 2026 is poised for a quiet reset, not a sudden rebound.
As the U.S. economy navigates a crossroads, real estate economists diverge on 2026 forecasts, though a common thread is the expectation that mortgage rates will continue to ease.
December 4, 2025
5 minutes
Key points:
- Economists present a wide spectrum of 2026 real estate predictions, largely due to uncertainty about how much the labor market will weaken.
- While views on home sales vary, most forecasts anticipate prices remaining largely flat.
- Inflation and job-market dynamics will shape mortgage rates, which are expected to trend downward. Rates remain a central driver of the market’s recovery potential.
We’ve reached the moment when housing researchers publish their year-ahead outlooks, but the economy’s unpredictability makes this task particularly challenging.
A year ago, forecasts for 2025 were not far off: 30-year mortgage rates stayed above 6%, and growth in home sale prices slowed. Predictions about sales growth ranged widely, as many forecasters overestimated momentum.
Depending on late-December developments, 2025 could end flat to slightly higher than 2024 in terms of home sales.
For 2026, the major theme among early forecasts is a gentle improvement for buyers and sellers, even amid ongoing economic uncertainty.
Buyers benefit from more inventory and better affordability, while sellers should see price stability and steadier demand. Each side could gain a bit more breathing room in 2026, according to Mischa Fisher, chief economist at Zillow.
Below is a snapshot of 2026 projections from Zillow, Redfin, Realtor.com, Bright MLS, and the National Association of Realtors, focusing on three core metrics: sales, mortgage rates, and prices. More forecasts are expected in the coming week.
No consensus on sales
Forecasts diverge on how many homes will move in 2026. A key reason is the economy’s unclear path: if the labor market weakens further, inflation could cool and lead to additional short-term rate cuts, or tariffs, wage growth, and other pressures could push prices higher and sow stagflation.
Existing home sales are expected to rise, but the magnitude varies by forecaster:
- Redfin projects a 3% increase, bringing the annualized pace to 4.2 million.
- Zillow anticipates a 4.3% rise, totaling about 4.26 million for the year.
- Realtor.com offers a conservative 1.7% gain, around 4.1 million annual sales.
- Bright MLS foresees a 9% jump, reaching about 4.5 million.
- The National Association of Realtors has an even more optimistic view, with a potential 14% increase.
Bright MLS attributes the expected pickup to pent-up demand and modestly improved affordability, though activity would still lag pre-pandemic levels. Lisa Sturtevant of Bright MLS emphasizes that 2026 will be a reset year with significant geographic variation in performance.
Redfin also describes 2026 as a reset year, anticipating a gradual return to higher sales as affordability slowly improves.
Mortgage rates set to trend lower
Rate movements will remain a dominant driver for 2026 sales, says Redfin’s chief economist, Daryl Fairweather. She expects rates to decline modestly, nudging sales upward slightly.
Inflation generally weighs more on rates than Fed leadership changes or the number of rate cuts anticipated next year. If the Fed cuts rates while inflation remains high, markets may expect further hikes later to compensate, which could blunt rate relief. Conversely, lower inflation could justify rate declines and boost sales.
Overall, 30-year mortgage rates are expected to ease a bit in 2026:
- Bright MLS projects a year-end rate around 6.15%.
- Redfin and Realtor.com foresee an average near 6.3% for the year, down from 2025’s ~6.6%.
- NAR offers a more optimistic view near 6%, while Zillow cautions rates may not dip below 6% in 2026.
A potential caveat: declining rates would likely come with a softer labor market, reduced spending, and cooling inflation. Unemployment spikes could paradoxically unlock steeper rate cuts if a recession looms, potentially fueling stronger home sales despite a weakening economy, notes Redfin’s Fairweather.
Price growth likely to stay mostly flat
Most forecasts anticipate limited price gains in 2026. The trajectory depends on mortgage rates and affordability:
- Redfin suggests prices may rise no more than 1% in 2026.
- Zillow expects about 1.2% appreciation as the market stabilizes.
- Realtor.com projects a total rise of around 2.2% in overall home values, even if inflation dwarfs that uptick.
- Bright MLS pegs the national median around $417,560, a roughly 0.9% increase.
- NAR presents a more bullish scenario with up to 4% price growth in 2026.
A second year of near-flat price growth would ease affordability pressures, especially if wage growth lags behind rising mortgage payments. John Burns of John Burns Research and Consulting highlights a stark discrepancy: mortgage payments have surged about 82% in five years, while incomes advanced only 26%. Closing this gap may require a significant rise in incomes, a meaningful drop in home prices, a decline in mortgage rates, or a combination of those factors.
And this is where the discussion likely becomes controversial: some forecasters warn that ongoing rate relief without corresponding income growth could still leave many buyers priced out, while others argue that even modest rate decreases can unlock substantial demand if wages catch up. What’s your take on the balance between rate moves and real income growth for housing affordability? Share your view in the comments.
