C
ompass’s chief economist, Mike Simonsen, projects a modest yet consistent rebound in the housing market for 2026, provided employment picks up and the so‑called shadow inventory becomes available.

    **Key takeaways**

    - **Affordability and sales**: Simonsen expects existing‑home sales to reach roughly 4.25 million in 2026, still below pre‑pandemic highs, with home prices rising less than 1 %.

    - **Inventory boost**: A 10 % jump in listings is anticipated, largely driven by the 150 000 properties currently withdrawn from the market.

    - **New era**: He calls 2026 the start of a “new era” where sufficient inventory allows sales to grow and incomes outpace price increases.

    **Uneven gains amid a divided economy**

    The projected improvement will not be uniform. The K‑shaped economy—where higher‑income households see wealth grow while lower‑income groups face stagnant wages and inflation—will shape market dynamics. Slow wage growth and restrained hiring, as companies trim post‑pandemic over‑staffing, will limit mobility, a key driver of real‑estate activity.

    Regional disparities will also play a role. Simonsen notes a clear divide between the Northeast and the Sun Belt, with differences in earnings, cost of living, and inventory levels influencing local markets.

    **Shadow inventory: a hidden opportunity**

    Unlike the 2008 crisis, where shadow inventory stemmed from underwater mortgages, today’s 150 000 withdrawn homes are largely owned by equity‑rich homeowners with low rates who are waiting for better market conditions to sell. If mortgage rates and hiring improve, these owners could trigger double‑transaction scenarios, boosting sales.

    **What to monitor in 2026**

    Simonsen will focus on three indicators as the spring buying season approaches:

    1. **New listings** – a steady rise signals a healthy market; a sudden influx could raise concerns.

    2. **Pending sales** – the weekly contract count reflects demand momentum.

    3. **Hiring trends** – corporate job additions indicate rising mobility and, consequently, more home purchases.

    In sum, while 2026 may bring a gradual uptick in sales and inventory, the gains will be uneven, shaped by economic divides, regional differences, and the interplay of employment and mortgage conditions. Agents should keep an eye on the shadow inventory and the three key data points to gauge the market’s trajectory.