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edfin forecasts a 2026 reset for the U.S. housing market, signaling a gradual rise in affordability and a rebound in home‑buying activity. The firm warns the reset will unfold over time, not as a sharp price correction or recession.
Key projections for 2026:
1. **Mortgage rates dip modestly.** The 30‑year fixed rate is expected to average 6.3 %, down from 6.6 % in 2025. While rates may fall below 6 % briefly, they are unlikely to stay low for long, as inflation risks and a likely avoidance of recession keep the Fed from aggressive cuts.
2. **A refinancing surge.** Even a slight rate decline should trigger a 30 % YoY jump in refinance volume, reaching roughly $670 B. About 20 % of homeowners carry rates above 6 %. The surge in 2025, when the Fed cut rates, saw applications rise 58 % in the week before the September cut.
3. **Slower home‑price growth.** Prices are projected to rise only 1 % YoY in 2026 versus 2 % in 2025, while wages grow around 4 %. This divergence means monthly housing costs will grow more slowly than wages, improving affordability for the first time since the post‑crisis era.
4. **Increased sales.** Existing‑home sales are expected to climb to 4.2 M in 2026, up from 4.1 M in 2025, driven by lower rates and better affordability that may entice buyers who hesitated this year.
5. **Changing household dynamics.** Homeownership rates for Gen Z and millennials are projected to stay flat. More adults will live with parents or roommates, and friends may co‑purchase homes under prenup‑style agreements. A survey found 6 % of Americans moved in with parents and another 6 % with roommates due to cost pressures. The fertility rate is also expected to continue its decline.
6. **AI as a matchmaker.** Artificial intelligence tools will help buyers specify exact criteria and engage in conversational searches, tailoring results to budget and preferences.
Redfin’s report, released Tuesday, highlights these trends as the market’s “Great Housing Reset” begins in 2026, offering a more affordable and active environment for buyers without a sharp correction or recession.
