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llustration by Lanette Behiry / Real Estate News
The 2026 housing outlook is one of steadiness rather than shock. Sales are expected to rise only modestly, mortgage rates should hover around 6 %, and prices are likely to stay flat. Inventory will climb back toward pre‑pandemic levels, but the homeownership rate will fall as many Americans remain priced out of the market.
**Key Forecasts for 2026**
1. **Existing‑home sales**
After three years of near‑record lows, the market has the ingredients for a slight rebound. Inventory is higher than it has been since 2019, and rates are lower than in 2022. These factors should lift sales a touch, but not dramatically.
2. **Home prices**
Prices are projected to remain roughly level. The larger supply exerts downward pressure, yet sellers have been responsive: many who didn’t receive satisfactory offers have pulled listings or stayed off the market, preventing a sharp inventory surge and keeping prices from falling further.
3. **Inventory levels**
The number of active listings is expected to reach pre‑pandemic levels by spring 2026. A “discretionary seller” trend—owners willing to sell only at a favorable price—will keep the average time on market higher, adding to the total listings. Buyers will benefit from more choices and greater negotiating power.
4. **Homeownership rate**
With current prices and rates, many middle‑class households find homeownership unattainable. Slower rent growth lets these potential buyers stay in rentals longer, and a growing segment of renters is opting for single‑family homes to enjoy house‑style living without a mortgage.
5. **Economic outlook**
The U.S. economy has weathered several shocks in 2025, remaining resilient. Payroll growth has slowed, largely due to a shrinking labor supply, while unemployment claims have stayed low. Corporate earnings have surpassed expectations, and trade‑policy uncertainty has eased as tariffs are reduced and new agreements take shape. A recession in 2026 is unlikely.
6. **Mortgage rates**
Rates are expected to stay below 6.25 % for most of the year and may dip slightly below 6 %. The Fed’s shift toward rate cuts, coupled with slower growth, has pulled 10‑year Treasury yields to about 4 %. The spread between Treasury yields and mortgage rates is narrowing toward its normal 2 % range, suggesting a gradual decline in refinance risk. However, significant drops in rates remain improbable.
**Bottom Line**
2026 will see a modest uptick in sales, stable prices, and inventory returning to normal levels. Mortgage rates will stay near 6 %, keeping many buyers out of the market and contributing to a decline in homeownership. The economy is poised to avoid recession, and while rates may ease slightly, dramatic reductions are unlikely.
